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A BAD TIME TO BE POOR

J U N E 2 0 0 3

CANADIAN CENTRE FOR POLICY

ALTERNATIVES – BC OFFICE

An Analysis ofBritish Columbia’s

New Welfare Policies

by Seth Klein and Andrea Long

A Bad Time to be Poor*: An Analysis of British Columbia’s New Welfare Policies

by Seth Klein and Andrea Long

Co-published by the Canadian Centre for Policy Alternatives and the Social Planning and Research Council of BC

June 2003

Acknowledgements: The authors would like to thank the following people for their helpful feedback on drafts of

this paper: John Argue, Sylvia Bashevkin, Gwen Brodsky, Sandy Cameron, Shannon Daub, Jane Dyson, Sylvia Fuller, Michael

Goldberg, David Green, Sarah Khan, Steve Kerstetter, Marc Lee, Ernie Lightman, Lesley Moore, Ginger Richards, Jean

Swanson, and Margot Young. We are also grateful for the advice and insights provided by Jared Bernstein, Dean Herd,

Andrew Mitchell, Marge Reitsma-Street, and the social assistance workers and clients we spoke to in the course of

conducting this research.

The content, opinions and any errors in this paper, however, are those of the authors, and do not necessarily reflect the

views of the CCPA or SPARC BC.

This research was assisted by an inequality research endowment fund provided by the Government of British Columbia.

About the authors: Seth Klein is the BC Director of the Canadian Centre for Policy Alternatives. He has a B.A. in

international relations and B.Ed. from the University of Toronto, and an M.A. in political science from Simon Fraser

University. A frequent media commentator on public policy issues, Seth is the author and co-author of numerous CCPA

studies and articles, including the 2001 study Depressing Wages: How Welfare Cuts Hurt Both the Welfare and Working Poor.

Andrea Long is a researcher with the Social Planning and Research Council of BC. She has a B.A. in Philosophy and an M.A.

from the Individual Interdisciplinary Studies Graduate Program at the University of British Columbia (Political Science,

Law, and Sociology). Andrea undertakes research on a variety of social policy issues related to income security and other

matters, including co-authoring the 2002 SPARC BC publication Falling Further Behind: A Comparison of Living Costs and

Employment and Assistance Rates in British Columbia.

Copyedit and layout by Nadene Rehnby • Cover photo by Shannon Daub, with thanks to the East End Food Co-op

* Thanks to the Rheostatics for inspiring the title

ISBN: 0-88627-344-7

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ContentsSUMMARY .......................................................................................................... 4

PART 1 Introduction .................................................................................... 8

A CLOSER LOOK How Do We Measure Success? The BC Exit Surveys ............... 10

PART 2 The Context: Where do BC’s newwelfare policy ideas come from? ............................................... 12

Why the Fraser Institute has it Wrong ........................................... 13

The 1996 US Welfare Reforms ........................................................ 15

US Lessons not Learned .................................................................. 15

The Context of US Welfare Reforms: Strong Economic Growth ...... 16

What Happens During an Economic Downturn? ........................... 17

PART 3 BC’s New Welfare Rules ............................................................... 19

Cuts to Rates and Benefits .............................................................. 19

Elimination of Earnings Exemptionsand the Child Support Exemption ................................................... 23

Exemption for Single Parents With Young Children,and Cuts to the Child Care Subsidy ................................................ 24

Tightening of Eligibility

“Employment Plans” and the Three-Week Wait ....................... 25

Two-Year Time Limits: Ending the Entitlement to Welfare ...... 27

Post-Secondary Students Unable to Access Welfare ................ 29

The Two-Year Independence Rule ............................................. 30

People with Disabilities ............................................................ 31

Sanctions .................................................................................. 33

Privatization.................................................................................... 34

Appeals Process Changesand the Elimination of Poverty Law Legal Aid ............................... 35

PART 4 A Progressive Alternative Welfare Reform Agenda ................. 37

PART 5 Conclusion .................................................................................... 40

Appendix Closer Look at the “Wisconsin Miracle” .................................... 42

Notes ........................................................................................................ 46

References ........................................................................................................ 50

Canadian Centre for Policy Alternatives – BC Office4

S U M M A RY

A Bad Time to be Poor

An Analysis of British Columbia’sNew Welfare Policies

three years (a figure that has since grown to $609 mil-

lion). The Ministry’s staff is being cut by 459 full-time

equivalent positions, and 36 welfare offices across the

province are being closed.

These budget savings are being achieved by a combi-

nation of cuts to welfare benefits and a further tighten-

ing of eligibility rules. The details of these welfare cuts

and rule-changes were revealed with the tabling of new

welfare legislation in April 2002—the Employment and

Assistance Act, and the Employment and Assistance for Per-

sons with Disabilities Act.

A number of BC’s new welfare policies are radical and

unprecedented in Canada. The two-year time limit rule

(limiting “employable” welfare recipients without children

to two years of support during any five year period), and

the “two-year independence test” (requiring new welfare

applicants to demonstrate that they have been financially

independent for two consecutive years), in particular,

represent a fundamental shift in Ca-

nadian social policy—the denial of

welfare when in need as a basic hu-

man right.

Many of BC’s new welfare poli-

cies are borrowed from the US wel-

fare restructuring of the 1990s. Thus,

this paper begins with a review of

the US experience. We examine what

welfare restructuring has meant for low-income people

in the US (and in an appendix, in Wisconsin—the “poster

child” for neo-liberal welfare changes). Next, each of the

major BC welfare policy changes is discussed and

critiqued in turn. Drawing on experience from the US

and other jurisdictions, we present the likely impacts of

BC’s new welfare legislation, and highlight contradictions

within the government’s policy program. The paper con-

cludes by presenting an alternative, progressive approach

to welfare reform.

This study sounds an alarm. Among the paper’s find-

ings and anticipated policy consequences are the follow-

ing:

• The BC government hopes its welfare rolls will de-

cline substantially over the next three years, as oc-

curred in the US over the 1990s. But evidence from

the US experience indicates that the dramatic

caseload declines were primarily a product of

IN JANUARY 2002, the BC government announced that

it intended to implement a dramatic program of

welfare restructuring, and that it would be cutting

the operating budget of the Ministry of Human

Resources (responsible for social assistance) by a

staggering $581 million (or 30 per cent) over the next

A BAD TIME TO BE POOR | An Analysis of British Columbia’s New Welfare Policies 5

unprecedented economic growth (a condition that

no longer exists). Over the past year, as the US

economy slowed and unemployment increased, US

welfare rolls grew for the first time since 1994.

Moreover, when the methodology for measuring

welfare caseloads is made consistent, US caseloads

are not substantially lower than those in Canada.

We also find that low-income people in the US con-

tinue to experience persistent—and in some cases

increased—hardship and poverty, and many former

welfare recipients have not found employment, de-

spite the favourable economic conditions that

marked the 1990s.

• The US-inspired policy with the most potential to

reduce caseloads (and increase hardship) is welfare

time limits. The first group of US families is only

now starting to hit its lifetime limits, so evidence of

the impact of this policy is very preliminary. Early

studies from states with shorter time limits, how-

ever, find that: those forced off welfare due to hit-

ting their time limits are worse off than those who

leave voluntarily; large numbers of time-limit

leavers continue to rely on food stamps and other

forms of assistance—options that will not be avail-

able in BC; at least one study notes higher rates of

evictions than among those who left welfare vol-

untarily.

• While the BC government has borrowed many

policy ideas from the US, it has chosen to import

only the policy “sticks” that push and keep people

off welfare (such as time limits, tough sanctions,

workfare, and tighter eligibility rules). None of the

policy “carrots” or supports that help people make

the transition to paid employment (such as en-

hanced child care, transportation support, increased

minimum wage, enhanced training and educational

opportunities, and the expanded use of earnings

exemptions) have been adopted. In the US, welfare

restructuring was not driven by a fiscal imperative

to cut spending. In fact, notwithstanding its tough

new rules, the US increased its spending on pro-

grams for low-income people during the post-1996

welfare reform period (in contrast with what is oc-

curring in BC).

• The BC government is forecasting a decline in wel-

fare caseloads despite the fact that it is not antici-

pating a drop in the unemployment rate. It is nor-

mal for welfare rolls to decline during economic

good times, but it is quite another to plan for a re-

duction in rolls when unemployment is stagnant,

and at a time when workers in resource-dependent

communities are struggling with the fall-out of the

softwood lumber dispute and exhausting their EI

coverage. In effect, the government’s new welfare

rules are undermining the ability of the welfare sys-

tem to function as an economic “automatic stabi-

lizer”—injecting money into people’s pockets when

people and communities are facing hard times.

• If the government’s program is successful in push-

ing many people off welfare into a weak labour

market—characterized by increased competition

for low-wage work—the outcome will be increased

hardship for both those leaving social assistance and

those already toiling in the low-wage workforce.

Greater competition for low-wage jobs will depress

wages and earnings, ironically harming the very

people welfare reformers purport to honour—the

“working poor.”

• The tool chosen by the Ministry to track former

recipients—“exit surveys” conducted by phone—

is highly problematic, particularly when it comes

to tracking homeless people, mobile people with-

out a steady phone number, or those who simply

cannot afford a phone. As a result, the findings over-

state the success former clients have in finding em-

ployment. The three surveys conducted to date have

managed to attain response rates of only 32 to 33

per cent. Nearly half those sought for the surveys

did not have a phone number in service. Thus, we

simply do not know what has happened to a ma-

jority of welfare leavers (but the high number of

people without working phones does not bode

well). Moreover, the exit survey questionnaire does

not include any questions exploring the presence

of continued hardships, such as difficulties paying

rent or utilities, or a continuing reliance on food

banks or other charities. Without this kind of in-

formation about the conditions faced by former


welfare recipients we simply do not know the hu-

man price of the government’s sought-after

caseload reductions.

• We expect that most of BC’s new welfare policies

will result in increased and serious hardship (and

in some cases they already are). The cuts to rates

and benefits reduce what was already an inadequate

level of income support. Prior to the latest cuts,

SPARC BC found that the maximum welfare in-

come available to a single parent with one child

covered only 65 per cent of minimum living costs.

With the new round of benefit reductions, these

families are expected to make do with $43 less each

month—a change that will make it practically im-

possible to make ends meet.

• The elimination of earnings exemptions (which al-

lowed people receiving social assistance to work in

the paid workforce and keep some of their earn-

ings) for all but those with disabilities represents

the loss of a vital income top-up. Indeed, without

earnings exemptions, many people are being forced

to commit fraud and hide their income. The new

rules force many people on social assistance into

an untenable Catch-22: if a person discloses that

they have income from paid work (as the rules say

they must), the deduction of this money dollar-for-

dollar means they are left with an unliveable in-

come. However, tough new sanctions may mean the

loss of benefits for breaking the rules.

• Perversely, many of BC’s new policies actually dis-

courage work re-entry, most notably the elimina-

tion of earnings exemptions, cuts to child care, cuts

to transition-to-work assistance (such as money for

work clothes and transportation), and the $6 train-

ing wage.

• For many people, the new three-week wait policy

(requiring new applicants to conduct a three-week

job search before a claim is reviewed) represents a

great hardship. In practice, for some, the three-week

wait is proving to be much longer (as much as six

weeks), before welfare workers are satisfied that an

adequate job search has been undertaken. People

without any income are being asked to search for

work, when in many cases they lack the financial re-

sources to do so. When applying for income assist-

ance, people have normally exhausted their last re-

sources, assets, and prospects. The policy is also risky

in that people without income for nearly a month

(or more) may face evictions, yet without secure and

stable housing, a bad situation could turn worse.

• The government is seeking to confine is obligations

to those they deem to be the “deserving” poor, such

as people with disabilities. Yet it is simultaneously

redefining who is considered disabled, so that only

those who can demonstrate a need for assistance with

the tasks of daily living are deemed entitled to dis-

ability benefits. Thousands of people with medical

conditions and disabilities that leave them unable to

sustain regular employment will be disqualified from

disability benefits.

• The elimination of legal aid funding for poverty law

matters means welfare applicants/recipients who be-

lieve they have been treated unfairly will be at a dis-

advantage. This change places increased demands on

lay poverty law advocates with non-profit organiza-

tions in BC, just as many of these groups are them-

selves facing provincial funding cuts and laying off

advocates. The consequence is that low-income peo-

ple needing help with a welfare, EI or WCB claim no

longer have equal access to justice, and may be de-

nied life-sustaining benefits to which they are enti-

tled.

• BC’s new approach to social assistance will indeed

mean that some people’s stay on welfare is more brief,

and that others are denied welfare entirely. But trou-

bling questions remain: What happens to those who

face more barriers to employment, or who run up

against the new time limits before the local economy

produces adequate employment? What happens to

those who are simply denied support under the new

rules? What happens to those who need meaningful

training opportunities, but find themselves in a new

welfare system with a greatly reduced capacity to

provide such training and education?


OVER THE COMING YEARS, IT WILL BE VITAL TO

monitor the impact of BC’s new welfare rules. Some of the

policy changes are untried and untested, most notably the

two-year independence test, particularly in the context of

an economic slowdown. The simultaneous implementa-

tion of all these extreme and punitive new rules, in combi-

nation with cuts to employment supports, is unprec-

edented. More research will be needed to track the poten-

tial effects outlined in this paper. In particular, careful

monitoring of measures of critical hardship and poverty—

homelessness, evictions, going without food, and health

impacts—will be essential. Thus far, the Ministry of Hu-

man Resources’ quarterly exit surveys fail to provide this

essential information.

We are deeply concerned that the new welfare rules are

a social catastrophe in the making. In particular, the com-

bination of time limits, the two-year independence test,

and the three-week wait with an economic downturn would

prove a toxic mix with profound social and health conse-

quences. Already, the new rules are causing increased de-

spair and desperation for many. There are early reports of

an increase in homelessness in Vancouver, and suicides have

been attributed to the disability reassessment process.

The welfare cuts and rule changes are being driven by a

desire to reduce government spending. The Ministry of

Human Resources has been targeted for the largest budget

cut of any ministry—nearly one third of the total cut to

BC’s direct public sector is to come from the MHR. In a

very concrete way, we are witnessing a transfer of income

from the poorest among us (those who need social assist-

ance) to the wealthiest among us (who received the lion’s

share of BC’s recent tax cuts).

Welfare is a critical element of our social safety net. It is

an important basic right in which almost all of society has

a stake—even if one is never forced to rely on social assist-

ance.

The welfare system is also an expression of social soli-

darity—it is one of the ways the members of our society

have chosen to look after one another when facing hard-

ships such as poverty, disability and unemployment, or

when people are forced to leave their families due to

physical or emotional abuse. In short, welfare is part of

how we recognize our moral obligations to one another.

BC’s new welfare rules are harmful, mean-spirited and

unjustified. These policies will result in unacceptable

hardship. They should be thoughtfully and compassion-

ately reconsidered. In light of the findings and dangers

presented in this paper, we recommend that the BC gov-

ernment:

• Repeal the cuts to welfare benefit rates (support

and shelter allowances and crisis grants);

• Reinstate earnings exemptions and child support

exemptions;

• Increase funding for quality child care programs,

ease the eligibility for child care subsidies, and re-

verse the requirement that single parents seek work

when their youngest child reaches age three;

• End the three-week wait for new welfare applicants;

• Abandon workfare—the forced participation in

work and training programs—as it is not neces-

sary to coerce people into accepting decent work

or meaningful training;

• Abandon time limits and the two-year independ-

ence test;

• Let welfare recipients pursue post-secondary train-

ing without loss of benefits when such training will

help improve a person’s long-term life chances;

• End the lifetime ban for those found guilty of wel-

fare fraud;

• Abandon the punitive and onerous reassessments

of those with disabilities, replace the 23-page dis-

ability assessment form with a shorter and sim-

pler form, reinstate the permanent designation of

disability, reverse the new narrow definition of dis-

ability, and reverse the requirement that Persons

with Persistent and Multiple Barriers to employ-

ment must have been on assistance for 12 of the

previous 15 months;

• Refrain from privatizing welfare delivery or com-

puterizing welfare determination; and

• Restore legal aid for poverty law.

The new welfare rules are a social catastrophe in the

making. In particular, the combination of time limits, the

two-year independence test, and the three-week wait with

an economic downturn would prove a toxic mix.


PART 1

Introduction

Act, and the Employment and Assistance

for Persons with Disabilities Act.

The welfare cuts and rule-changes an-

nounced in January 2002 came as a sur-

prise for a number of reasons. First, as

mentioned above, the previous govern-

ment had already cut welfare benefits to

levels at which recipients lacked sufficient

income to meet even basic needs. Second,

Premier Campbell was asked during the 2001 election

campaign whether a new Liberal government would re-

duce welfare benefits, and he replied with an unequivo-

cal “We have no intention of reducing welfare rates.”3 The

Liberal’s New Era election platform also said nothing

about reforming or cutting welfare. When people in Al-

berta and Ontario voted for Ralph Klein in 1992 and Mike

Harris in 1995, they knew they were voting for welfare

cuts. The same cannot be said of those who voted for the

BC Liberals in 2001.

Third, the new BC government cut welfare during a

period of economic slowdown, and at a time when work-

ers in resource-dependent communities across the prov-

ince are struggling with the fall-out of the softwood lum-

ber dispute and exhausting their Employment Insurance

coverage. In its February 2002 Budget, the BC govern-

ment forecast a decline in welfare caseloads of about

40,000 (or 25 per cent) over the following three years,

even though the unemployment rate was expected to rise.

Page 155 of the Budget states that this reduction in

caseloads is based on an average unemployment rate over

the next three years of 6.9 per cent. Yet, according to the

2002 Budget, there is not a single year between now and

2006 in which the unemployment rate is forecast to fall

BRITISH COLUMBIA witnessed a substantial drop

of 29 per cent in welfare caseloads between 1995

and 2001 (see Figure 1).1 Most of this decline was

a consequence of economic growth, job creation,

and a resulting reduction in unemployment. Some

of the caseload decline, however, was the result

of welfare changes brought in by the NDP provincial gov-

ernment during 1995/96—including cuts to welfare ben-

efit rates and tighter eligibility rules—that pushed some

people off welfare and discouraged many others from

claiming support. Both the Canadian Centre for Policy

Alternatives and the Social Planning and Research Coun-

cil of BC are on record criticizing these welfare cuts as

harmful, mean-spirited and unjustified.

The new BC government, however, was not satisfied.

In the face of large tax-cut-induced deficits, the govern-

ment announced in January 2002 that it intended to im-

plement a dramatic program of welfare policy changes,

and that it would be cutting the operating budget of the

Ministry of Human Resources (responsible for social as-

sistance) by a staggering $581 million (or 30 per cent)

over the next three years, from $1.936 billion to $1.355

billion.2 The Ministry’s staff is to be cut by 459 full-time

equivalent positions, and 36 welfare offices across the

province are being closed.

These budget savings are being achieved by a combi-

nation of more cuts to welfare benefits and a further tight-

ening of eligibility rules. The details of the cuts and rule-

changes were revealed with the tabling of new welfare

legislation in April 2002—the Employment and Assistance


below 7.2 per cent. (Indeed, in the 2003 Budget, this fore-

cast is downgraded—the government now reports it does

not expect to attain an unemployment rate of 7.2 per cent

until 2007.)

Something is not right here. The government’s own

forecasts are in conflict. It is normal to expect welfare

caseloads to decline as unemployment falls, but it is quite

another matter to predict falling caseloads while unem-

ployment stays stable or increases.

The greatest surprise about the new government’s

welfare cuts, however, is the nature of the reforms them-

selves. A number of the new welfare policies are radical

and unprecedented in Canada. The new two-year time

limit rule (limiting “employable” welfare recipients with-

out children to two years of support during any five year

period) and the “two-year independence test” (requiring

new welfare applicants to demonstrate that they have been

financially independent for two consecutive years), in

particular, represent a fundamental shift in Canadian

social policy—the denial of welfare when in need as a

basic human right. (More on these new policies below.)

The purpose of this paper is to

analyze and critique BC’s main wel-

fare changes in the hope they will be

thoughtfully—and compassion-

ately—reconsidered. We also hope

this paper provides anti-poverty and

social justice activists with the facts

and analysis they need to challenge

these rollbacks of basic rights that

were fought for and won over dec-

ades.

The Ministry of Human Re-

source’s “Service Plan” (released in

full along with the February 2002

Budget) offers no indication of

where these harsh policy ideas come

from. No literature is cited, and no

jurisdictions are pointed to as evi-

dence that these reforms will, as al-

leged, help improve the circum-

stances of low-income people. Nevertheless, the inspira-

tion for most of the changes is no mystery. Many of these

policies have been advocated by the neo-liberal Fraser

Institute for years, and a number are clearly drawn from

the United States welfare reform program of the 1990s,

and to a lesser extent from Ontario.4

To provide some context for BC’s new welfare poli-

cies, this paper begins with a review of the US experience

and welfare reform literature. We examine what welfare

reforms have meant for low-income people in the US

(and, in an appendix, in Wisconsin—the “poster child”

for neo-liberal welfare restructuring). Next, each of the

major BC policy changes are discussed and critiqued in

turn. Drawing on experience from the US and other ju-

risdictions, we present the likely impacts of BC’s new

welfare policies, and highlight contradictions within the

policy program. Finally, we propose an alternative, pro-

gressive approach to welfare reform—one that truly helps

those in need, rather than punishes them; one that offers

individualized support and hope; and one that empha-

sizes job creation, not personal blame.

A number of the new welfare policies are radical and

unprecedented in Canada. The new two-year time limit rule

and the “two-year independence test” in particular, are a

denial of welfare when in need as a basic human right.

Source: Ministry of Human Resources. Monthly Statistics– August 2002.

Note: The average annual caseload figures in the chart include those receiving temporary assistance

(‘employable’ recipients), continuous assistance (persons with disabilities) and child in the home of a

relative cases. A welfare ‘case’ can include more than one person.

250,000

200,000

150,000

100,000

50,000

01995 1996 1997 1998 1999 2000 2001 2002

Figure 1: BC Welfare Caseloads, 1995-2002


TOO OFTEN, the purported success of welfare reform is

based on one overriding measure—caseload

reductions. But this is not how success should be

measured. The true measure of success ought to be

poverty reduction, and the associated goals of job

creation (stable, quality jobs) and earnings growth for

low-income people.

This mis-measuring of success is evident in the

Ministry of Human Resources’ new “Service Plan.” The

Plan outlines the “performance measures” by which the

Ministry is to be judged over the coming years. It sets

out various targets and goals, such as ensuring all

clients have signed “Employment and Assistance

Agreements,” providing job search and other skills

training, reducing caseloads, and tracking employment

among welfare leavers. Indeed, stunningly, the MHR’s

deputy minister even receives performance “bonus” pay

for successfully reducing caseloads. Rewarding

government appointees for reducing the numbers of

people they serve without regard for the human

consequences represents a fundamental conflict of

interest.

Conspicuously absent from the Ministry’s

“performance measures” is any reference to the quality

of the training provided or employment found by

former welfare recipients. Nothing is said about the

incomes and earnings of those leaving social

assistance. Nothing is said about poverty, or the goal

of reducing poverty. There are no performance

measures or targets related to reducing (let alone

eliminating) the use of food banks or reducing

homelessness and evictions—all measures one would

expect from a Ministry that should ultimately be

concerned with poverty and well-being.

The BC Welfare Exit Surveys

One positive development appears to be an improved

system for tracking what happens to former clients, and

an increased willingness on the part of the Ministry to

undertake this monitoring. Unfortunately, the tool

chosen by the Ministry to track former welfare

recipients—“exit surveys” conducted by phone—is

notoriously problematic, particularly when it comes to

tracking homeless people, mobile people without a

steady phone number, or those who simply cannot afford

a phone. As a result, the findings tend to overstate the

success former clients have in finding employment.

For example, the MHR has (at the time of writing)

published three quarterly exit surveys of those who left

social assistance and stayed off for six months. All three

surveys were conducted by phone, and surveyed people

who left social assistance prior to BC’s new welfare

policies taking effect. The first survey found that just

over 50 per cent of respondents left assistance for work,

the second reported that 66 per cent of respondents left

for work, and the third that 67 per cent left for work

(results that are fairly consistent with previous exit

surveys, as welfare is always subject to a considerable

amount of people cycling on and off).

However, there are two important reasons to be

cautious about what these results tell us. First, by

surveying only those people who have stayed off welfare

for six months, the government’s exit polls automatically

miss all those who have cycled back onto welfare in less

than six months. In many respects, the surveys merely

state the obvious—of course most of those who leave

welfare and stay off do so because they have found some

form of paid employment. But given that a large number

of welfare recipients cycle on and off the program, the

exit survey results present an exaggerated view of the

“success” of workforce attachment measures. Those

recipients able to stay off welfare for six months or more

are likely those with the fewest barriers to employment.

How Do We Measure Success?

A CLOSER LOOK


Second, the first exit survey managed to attain a

response rate of only 33 per cent, while both the second

and third surveys achieved response rates of only 32 per

cent. Of those sought for the surveys, 40, 46, and 48 per

cent, respectively, did not have a phone number in

service, while another quarter to one fifth were either

“unavailable” or declined to be interviewed. The survey

methodology is inherently flawed, as many low-income

people do not have or cannot maintain phones. Thus, we

simply do not know what has happened to the majority of

welfare leavers.5

Moreover, the MHR’s exit survey questionnaire does

not include any questions that seek to determine the

presence of continued hardships, such as difficulties

paying rent or utilities or a continuing reliance on food

banks or other charities. Without this kind of information

about the conditions being confronted by former welfare

recipients, we are missing a big piece of the story. We do

not know the human price of the government’s sought-

after caseload reductions, and the government cannot

claim to have any true knowledge of the economic

circumstances of most former welfare recipients.

If the government were fully committed to knowing

what happens to welfare leavers, its exit surveys would

more vigorously seek out all former clients (not rely solely

on phone surveys). The MHR would conduct long-term

studies that follow the same people for many years (to

determine whether their lives in fact improve). And the

government would not shy away from asking both current

and former welfare clients about their experiences with

various hardships (such as evictions, problems paying the

rent, going without food, etc.) Without such active

research, claims of welfare reform “success” will remain

unsubstantiated and indefensible.

The first exit survey managed to attain a response rate of only

33 per cent, while both the second and third surveys achieved

response rates of only 32 per cent. Thus, we simply do not know

what has happened to the majority of welfare leavers.

Life After Welfare

Interestingly, a new study published by Statistics

Canada, entitled Life After Welfare: The Economic Well Being

of Welfare Leavers in Canada during the 1990s, does a much

better job of tracking what has happened to former

welfare recipients.6 The StatsCan report, rather than

using one-time phone surveys, used multi-year tax

return data to track changes in the family incomes of

former welfare recipients over many years. While this

methodology still has limitations—it misses those who

do not file tax returns, and it does not capture the day-

to-day hardships many face—it does provide a more

detailed picture of life after welfare than the BC MHR

surveys.

The findings of the StatsCan study are deeply

troubling. While most welfare leavers – six in 10 – saw

their income go up (as would be expected), “family

income declined (sometimes substantially) for about one

third of welfare leavers.” This trend occurred in every

province, with the BC figures almost exactly matching

the national average. For example, in British Columbia,

two years after leaving welfare, the bottom third of

welfare leavers found themselves with average family

incomes of a mere $2,700 per year—well below even the

paltry sum provided by welfare—and only after about

five years did the incomes of these families tend to

return to what they had received while on social

assistance.

Clearly, too many welfare leavers are not finding

work with adequate pay and hours. A significant number

of those pushed or kept off welfare face significant

barriers to employment. And many have existed on

abysmally low incomes—even during a period of

economic growth and declining unemployment.


The BC government itself has little to offer in response

to these questions, other than oft-repeated rhetoric about

moving people from welfare to work, and fostering “self-

reliance” and “personal responsibility.” The day the new

welfare legislation was introduced, the government’s news

release spoke merely of reforms “designed to help break

intergenerational dependency on welfare” and “help peo-

ple achieve independence.”7 Social assistance (welfare)

was renamed “Employment and Assistance,” signalling

the government’s new emphasis on shifting people into

the paid workforce as quickly possible. However, the sub-

stance of the new legislation offers little in the way of a

helping hand—instead it details a list of harsh and puni-

tive measures designed to push and keep people off so-

cial assistance. As mentioned above, the Ministry’s “Serv-

ice Plan” cites no research, nor does it point to other ju-

risdictions as evidence that its reforms will improve the

lives of low-income people.

At one level, there is clearly a fiscal imperative at work:

the BC government has stated that it must cut overall

provincial spending by $1.9 billion over three years. With

the health and education budgets frozen, the Ministry of

Human Resources has been targeted for a large cut. In-

deed, nearly one third of the total cut to BC’s direct pub-

lic sector is to come from the MHR. In a very concrete

way, we are witnessing a transfer of income from

the poorest among us (those who need social as-

sistance) to the wealthiest among us (who re-

ceived the lion’s share of BC’s recent tax cuts).8

Yet it is equally clear that many of the welfare

changes are also ideologically motivated. Specifically, they

are based on an ideological presumption about the peo-

ple in need of income support, who are seen as lacking

skills (at best) or as lazy and unwilling to work (at worst).

The overall package of policy changes is based on a belief

in personal responsibility and minimal government. Un-

derlying many of the changes is a distinction the govern-

ment clearly draws between the “deserving” and “unde-

serving” poor (thus, some benefits for people with dis-

abilities are enhanced, while these same benefits for those

without disabilities are eliminated). The ideological un-

derpinning of the reforms is a belief in individual self-

sufficiency in a free market economy. This approach

refuses to entertain larger structural and economic con-

siderations, such as the failure of the free market to pro-

duce an adequate supply of decent paying jobs, the fail-

ure of the market to produce an adequate supply of af-

fordable housing, or the reality of socio-economic in-

equalities and oppression, such as the greater challenges

faced by low-income families, the systemic discrimina-

tion faced by women in the workplace, or the cultural

and workplace racism experienced by aboriginal people

or other visible minorities.

Within this neo-liberal and individualistic world-view,

poverty is seen not as a result of bad policy choices,

PART 2

The Context

Where Do BC’s New WelfarePolicy Ideas Come From?

WHAT IS THE motivation—the inspiration—for

the BC welfare changes? How are these cuts

to welfare benefits and eligibility justified?


economic conditions, market failures or racial and gen-

der discrimination, but rather as a consequence of bad

personal choices. Drug addiction, for example, is seen not

as a health issue but as a lifestyle choice. Similarly, single

mothers are seen as choosing a life of poverty, rather than

as carrying out an important social task—child rearing.

Thus, underlying the new welfare rules is a continuing

shift from a model of mutual responsibility and caring

to one of personal obligation and self-sufficiency.

Many of BC’s new welfare policies are not new at all—

they have been borrowed from other jurisdictions, pri-

marily the US (and to a lesser degree Ontario and Al-

berta). As we will see, however, the BC government has

selectively imported many of the US policy “sticks” and

few, if any, of the policy “carrots” or supports (highlight-

ing the central objective of budget-cutting that is at work).

Indeed, we have heard that prior to the introduction of

BC’s new welfare policies, welfare officials from Wiscon-

sin visited BC and consulted with staff at BC’s Ministry

of Human Resources.

It should also be noted that the way was paved for BC’s

new welfare rules by a 1995 federal government decision

to eliminate the Canada Assistance Plan (CAP), and re-

place it with the Canadian Health and Social Transfer

(CHST). The CAP Act enshrined fundamental welfare

rights, including the right to an adequate level of income

support, the right to assistance when in need, and the

right to receive assistance without forced participation

in training or work programs. If a province failed to re-

spect these rights, its federal funding under CAP could

be withdrawn. These rights were eliminated in Canadian

law, however, with the implementation of the CHST in

April 1996 (although they continue to be enshrined in

international agreements to which Canada is a signa-

tory—even if these obligations are systematically ignored

by federal and provincial governments). The elimination

of CAP signalled to provincial governments that they were

free to experiment with welfare restructuring, including

restrictive eligibility rules, and that the federal govern-

ment would no longer require the protection of welfare

rights as a condition of receiving federal transfer pay-

ments.

Why the Fraser Institutehas it Wrong

Many of BC’s US-style welfare changes were foreshad-

owed in a report published by the neo-liberal BC-based

Fraser Institute in August 2001 entitled Surveying US and

Canadian Welfare Reform. The Fraser Institute report

praised the US welfare restructuring of the 1990s, and

urged Canadian provinces to do likewise.9 The report

centres around two key questions: First, why are Cana-

dian welfare caseloads consistently higher than those in

the US? And second, why have Canadian caseloads

trended upward over the last 20 years? Both observations

are technically correct (although, as mentioned earlier,

caseloads have been in sharp decline since 1995); how-

ever, the explanations offered and solutions prescribed

are replete with errors of omission and selective inter-

pretation of the facts.

For example, in seeking to explain the higher caseloads

in Canada, nowhere does the Fraser Institute mention

the highly noteworthy fact that the US provides federal

cash assistance (the program used to measure US “wel-

fare” caseloads) only to families with dependent children.

This fundamental fact may be hard for most Canadians

to believe. In the US, if you do not have dependent chil-

dren, you simply cannot access federal cash assistance,

nor state cash assistance in most cases. You may be able

to access food stamps or other low-income programs, but

these are not captured in welfare caseload statistics. Is it

any wonder, then, that the US is home to so much more

homelessness than Canada?10

The fact that the US does not provide federal cash as-

sistance to those without dependent children makes

straight statistical comparisons between the countries

highly misleading. In BC, approximately one third of the

welfare caseload consists of “employable” individuals or

In a very concrete way, we are witnessing a transfer of

income from the poorest among us (those who need social

assistance) to the wealthiest among us (who received the

lion’s share of BC’s recent tax cuts).


couples without children (see Figure2)—groups that are

simply denied cash benefits throughout most of the US.

This fact also helps to explain why the US has lower wel-

fare caseloads than Canada, but a higher overall poverty

rate.11

There are other important differences between Cana-

dian and US welfare statistics. While provincial income

assistance rolls capture virtually all “welfare” cases in

Canada, in the US federal cash assistance represents only

one of many income assistance programs. Indeed, the

federal cash assistance program (used by the Fraser In-

stitute to measure overall US caseloads) represents less

than half of those receiving some form of social assist-

ance in the US—many more people receive support

through the Food Stamp program or through a separate

Disability Insurance system. Once all of these factors are

considered, US welfare caseload levels are much closer to

those in Canada.

The Fraser Institute report also fails to recognize other

important differences between Canadian and US society

that help to explain at least some of the caseload gap, such

as dramatically higher prison incarceration rates in the

US and the higher percentage of working age people in

the US military. In many respects, both institutions op-

erate as substitutes for income support for many low-

income people. At over 0.7 per cent, the US incarceration

rate is higher than any other country in the world except

China, and is dramatically higher than Canada’s, at ap-

proximately 0.1 per cent.12 US sociologist Bruce Western

contends that, contrary to popular perception, the US

labour market has not become less regulated (through

cuts to welfare and unemployment insurance). Rather,

the focus of labour regulation—and public expendi-

tures—has merely shifted from income support to the

more punitive and controlling correctional system.13

In discussing the upward trend in welfare caseloads in

Canada, the Fraser Institute authors similarly neglect to

note key changes in broader economic policy that have

led to increased unemployment, including high interest

rates in the 1980s and early 1990s, the free trade deals,

corporate restructuring, recessions followed by years of

“jobless recovery”, etc. (ironically, these are all policies

for which the Fraser Institute has been a strong advo-

cate). At the very least, these policies offer some explana-

tion for the welfare caseload trend. Amazingly, never once

do the authors mention the monumental restructuring

of Unemployment Insurance over the late 1980s and early

1990s, which resulted in the percentage of unemployed

workers who qualify for UI coverage plummeting from

74 per cent in 1989 to 36 per cent in 1997 (and which

disproportionately affected women).14 This profound

policy change clearly led to more people turning to pro-

vincial welfare programs.

Instead, the Fraser Institute authors explain higher

Canadian welfare caseloads as a product of a system that

is too easily accessed and thus breeds “dependency.” Fault

is found with the Canadian welfare system—and implic-

itly with recipients of welfare themselves—but not with

the overall economy, the lack of

decent paying jobs, or cuts to UI.

The Fraser Institute report recom-

mends time limits, tougher sanc-

tions for non-compliance with

welfare rules, work requirements

(workfare), “diversion” strategies

to keep new applicants from ac-

cessing welfare, and privatiza-

tion15—in short, the very policy

changes we are now seeing imple-

mented in BC.

Source: Ministry of Human Resources. 2002.

Monthly Statistics – Support Cases by Family Type – August 2002.

Note: A welfare ‘case’ can include more than one person.

Continuousassistance

37%

Temporarilyexcused

15%

“Employable”families with

children17%

“Employable”couples without

children2%

“Employable”singles29%

Figure 2: BC Welfare Caseload Distribution, August 2002


The 1996 US Welfare Reforms

Welfare cuts and rule changes have been implemented in

numerous US states and Canadian provinces for over 10

years, but the welfare reform agenda reached a new level

in the US in 1996 with the passage of a federal law enti-

tled the Personal Responsibility and Work Opportunity

Reconciliation Act (PRWORA). PRWORA replaced Aid for

Families with Dependent Children (the federal welfare

program in place since 1963) with a new program enti-

tled Temporary Assistance for Needy Families (TANF).

Among other things, PRWORA sets out the minimum

rules US states must incorporate into their welfare sys-

tems if they are to receive federal money. States can im-

pose harsher rules if they choose—and many have—but

cannot loosen the welfare rules mandated by the Act.

PRWORA and TANF represented a watershed—“the

end of welfare as we know it,” as then-President Clinton

proclaimed. The new act contained many elements, but

at its heart was the introduction of time limits. PRWORA

and TANF proclaimed an end to the “entitlement” to

welfare for families with children by mandating a five-

year lifetime limit for the receipt of welfare benefits.

In addition to this five-year limit, PRWORA/TANF

rules required that welfare recipients participate in work

or training programs in exchange for benefits—a policy

known as workfare. The law also limited the ability of

immigrants to qualify for benefits, narrowed the circum-

stances under which children can qualify for disability

benefits, and reduced the federal Food Stamp program.16

States were also encouraged to greatly expand the use of

tough sanctions for non-compliance with welfare rules

during this period.

PRWORA was due to be renewed in 2002, but Con-

gressional agreement could not be reached. Thus, the

current law was extended for one year while negotiations

continued. Although both parties agreed that the 1996

overhaul of the welfare system was “successful,” they disa-

greed on the measures needed to assist poor Americans.

In mid-February 2003, however, the US House of Repre-

sentatives approved Republican welfare legislation that

maintains the five year lifetime time limit on the receipt

of welfare benefits, places strict limits on the amount of

time many welfare recipients can spend in education and

training programs, and dedicates $300 million to pro-

grams promoting marriage.17

US Lessons not Learned

As will be discussed below, the US welfare reforms have

caused increased hardship in many cases, a reality that

will only intensify as more families reach their five-year

time limits. Nevertheless, it is also important to note that

not all of the new welfare measures introduced under

PRWORA were of the “tough love” variety. The US re-

forms included an increase in spending on many pro-

grams for low-wage workers, and numerous policies de-

signed to increase the incomes of poor families.

In contrast to the BC policy changes, the US welfare

changes appear not to have been driven by a fiscal im-

perative to cut spending. The US actually increased spend-

ing on child care, transportation support, and training

programs. Federal spending on child care programs for

low-income families increased from $4.1 billion in 1997

to $6.9 billion in 1999.18 The Clinton administration also

increased the federal minimum wage, and doubled the

value of the Earned Income Tax Credit (EITC, a federal

cash benefit to low income people with employment in-

come).19 Indeed, the US now spends considerably more

on the EITC—about $30 billion—than it ever did on cash

assistance under the old Aid to Families with Dependent

Children or the new TANF systems.20

Similarly, at the state level, welfare reform included an

expanded use of “earnings disregards” (known as “earn-

ings exemptions” in Canada)—rules that allow people

The ideological underpinning of the reforms is a belief in

individual self-sufficiency in a free market economy.

This approach refuses to entertain larger structural and

economic considerations, such as an inadequate supply of

decent jobs or affordable housing, or systemic discrimination.


receiving social assistance to work in the paid workforce

and keep some of their earnings.21 Earnings exemptions

are important not only because they offer welfare recipi-

ents a means to supplement their meagre income, but

also because they build connections to the paid workforce.

Earnings exemptions have now been eliminated in BC

for “employable” recipients of temporary income assist-

ance.

The Godfather of US welfare restructuring, former

Governor of Wisconsin Tommy Thompson (now Presi-

dent Bush’s Secretary of Health and Human Services),

was fond of noting that “You can’t do welfare reform on

the cheap”22—an operating principle that stands in stark

contrast with the changes occurring in BC, which are

driven in large part by cost-cutting objectives. In fact,

when Wisconsin welfare officials visited BC’s MHR, they

warned their BC colleagues that Wisconsin’s reforms did

not save the state money (for more, see appendix on the

Wisconsin experience).

Indeed, TANF was actually structured so as to ensure

that cost-cutting would not drive the reform agenda. The

US federal government promised state governments that

TANF block funding would be held stable for five years.

Moreover, these funds came with conditions. The federal

government required that states match their TANF con-

tribution by 75 per cent, and insisted that all TANF fund-

ing be used exclusively for programs for low-income peo-

ple. Thus, as welfare caseloads declined (primarily due

to strong economic growth), large sums of money be-

came available for other programs for low-income peo-

ple.23 The end result: US spending under TANF has in-

creased in recent years despite caseload drops. This con-

trasts sharply with Canada’s experience under the Cana-

dian Health and Social Transfer introduced by the fed-

eral government in 1995. The dollar value of CHST pay-

ments—combined cash transfers from the federal gov-

ernment to the provinces for health care, post-secondary

education and welfare—fell sharply between 1995 and

2000. Moreover, the provinces are free to direct this fed-

eral transfer towards whatever they wish, and are not re-

quired to direct the transfer to social assistance and re-

lated programs.

The Context ofUS Welfare Reforms:Strong Economic Growth

US welfare caseloads (measured as those families receiv-

ing cash assistance under the TANF program) declined

by 53 per cent between 1996 and 2000. A debate exists,

however, regarding how much of the dramatic decline

since the mid 1990s was due to economic growth and the

resulting job creation, versus the impact of the welfare

reforms themselves (with many policy-makers keen to

claim the latter). A large number of US studies have

sought to determine the relative impact of these factors,

each employing different methodologies and coming to

differing conclusions. Most studies agree, however, that

the economy played a significant role. A near academic

consensus has emerged that the welfare reforms them-

selves account for between 15 and 30 per cent of the US

caseload decline since 1995.24 Moreover, to the extent that

welfare reforms deserve credit, it is very difficult to de-

termine how much is attributable to the policy “sticks”

(such as workfare and time limits) versus policy “carrots”

(such as the expanded Earned Income Tax Credit, en-

hanced child care and other work supports) that helped

make low-wage work pay.

What is indisputable is that the US welfare reforms

occurred during a period of unprecedented economic

expansion and record low unemployment, masking and

delaying the true impact of these “fair weather” welfare

reforms. The US economy generated about 14 million

jobs during the latest expansion—the longest such pe-

riod since the turn of the century.25 Economists in both

the US and Canada have found a strong relationship be-

tween unemployment and welfare caseloads,26 and in

particular between welfare rolls and the availability of

high-wage jobs for low-skilled workers.27

In contrast to the BC policy changes, the US welfare changes

appear not to have been driven by a fiscal imperative to cut

spending. The US actually increased spending on child care,

transportation support, and training programs.


Upon reviewing the literature, economists Jared

Bernstein, Mark Greenberg and Steve Savner concluded

that:

…the economy and the policy interacted in a way

which is extremely difficult to tease out of the mod-

els. Welfare reform sent a strong, new message to

both recipients and potential recipients regarding

the urgency of moving from welfare to work, and

that message went out at a time when many new

employment opportunities and work supports were

becoming available.28

Yet, even in the context of unprecedented economic

growth, many former welfare recipients have not found

jobs. Even the Fraser Institute finds that, depending on

the study, only somewhere between 45 per cent and 70

per cent of former US welfare recipients report having

employment earnings,29 results that are not dissimilar

from the period prior to welfare reforms. We know very

little about how those without employment income are

living.

What Happens Duringan Economic Downturn?

A great unknown hangs over the current debate about

US welfare reform: What happens during a period of pro-

longed economic downturn, particularly after large num-

bers of people have exhausted their lifetime time limits?

One cannot definitively answer this question yet. It

remains too early for the collection of extensive hard

data—at this stage, hardship stories are still primarily an-

ecdotal. Only recently has the first group of families be-

gun hitting its time limits. The reaction of most states to

Hardship During the Boom Years

Despite strong economic growth during the 1990s, many US studies have found evidence of continued hardship and

poverty among those receiving social assistance, as well as among employed welfare leavers:

• A study by the Washington-based Economic Policy Institute (EPI), using data from two National Surveys of

American Families in 1997 and 1999, found that “Among families that left welfare between 1997 and 1999 for

full-time employment, nearly half experienced hardships such as going without food, necessary medical care,

or housing.” According to the study, about two-thirds of former welfare recipients are working, and four out

of five worked at some point after leaving welfare. “However, the kinds of employment these former welfare

recipients found often failed to provide them with enough income to keep them and their families from

experiencing hardships.” Moreover, despite the unprecedented economic growth that marked the final years of

the 1990s and record low unemployment, “the level of hardships among those that left the welfare rolls did

not improve in 1997 or 1999.”37

• The EPI study distinguishes between “critical” hardships that threaten a family’s health and well-being (such

as going without food or necessary medical care, eviction, utility shut off) and “serious” hardships that pose

day-to-day difficulties (such as not making house payments, worrying about food, having the phone

disconnected). Among recent welfare leavers, the number who reported experiencing one or more critical

hardships over the previous year actually rose between 1997 and 1999, from 39 per cent to 46 per cent.38

• Nationally, about 40 per cent of welfare leavers aren’t working. Of those who are working, most are earning

very low wages in the range of $6 to $8 per hour.39

• Recent data indicate that, while the incidence of poverty in the US declined overall during the 1990s, poverty

“actually deepened for those who remained poor, and has increased among working families.”40

• Nationally, the 2001 recession clearly took a toll—for the first time since 1993, the national poverty rate rose

to 11.7 per cent (up from 11.3 per cent in 2000)41 and hence proved unable thus far to reach lows attained in

the 1970s.42 As Sheldon Danziger of the University of Michigan’s Poverty Research and Training Center puts it,

“We have never been wealthier as a nation, but millions of families still have difficulty making ends meet.”43

(Also see appendix on the Wisconsin experience.)


this first group has been to bend the new welfare rules by

granting extensions and exemptions (which TANF allows

to a limited degree) so as to avoid the unseemly task of

throwing mostly single parent families into the street.30

As a result, by the summer of 2002, “only around 8,000

families nationwide have had their case closed because

of the 60-month time limit and are not receiving other

assistance,” while another 85,000 have had their cases

closed after reaching state time limits of less than five

years.31 But if the economic slowdown persists and un-

employment continues to rise, the policy flexibility cur-

rently available to state governments will shrink. (Early

data is now available for the few states that imposed time

limits of less than five years. This data is reviewed in the

“time limits” section below.)

As American writer Barbara Ehrenreich and political

scientist Frances Fox Piven have noted, some low-income

families have found themselves caught in a bitter Catch-

22 under TANF rules. Although many single mothers

found work over the past five years, the income they re-

ceived from these primarily low-wage jobs was so mea-

gre that they continued to qualify for and receive income

supplements under TANF. The catch is that even though

they were working, so long as they received cash top-ups

from welfare the clock kept ticking on their five-year time

limit. Over the past year and a half, as the economy went

into a downturn, many of these women lost their low-

wage jobs (last hired, first fired) just as they were hitting

the wall on their welfare time limits. Now they are find-

ing themselves without any source of income.32

The 2001 recession offered a taste of how fleeting the

gains can be. Unemployment rose, incomes fell slightly,

and the official national poverty rate rose for the first

time since 1993 to 11.7 per cent (up from 11.3 per cent

in 2000).33 Welfare caseloads also increased in many states

for the first time since 1995. A survey done for the US

Conference of Mayors found that requests for emergency

food assistance rose by an average of 23 per cent in ma-

jor US cities in 2001, while requests for shelter increased

by 13 per cent.34 Unemployment continued to rise

through 2002, the poverty rates will likely increase again

in 2002 (although the data is not yet available), and for

the first time in eight years, the national total of families

receiving welfare grew.35

Many US welfare researchers are very concerned about

what will happen if the US economic slowdown persists.

Economists Bernstein, Greenberg and Savner note that,

just as the boom of the 1990s disproportionately ben-

efited the employment and earnings of low-wage work-

ers (particularly African-Americans and single mothers),

so too are these groups disproportionately hit by an eco-

nomic downturn.36 The toxic combination of families

hitting their welfare time limits during a recession could

be very ugly indeed, with tremendous social fall-out as

thousands of families experience huge income losses. The

same is true, of course, for British Columbia, which is

implementing its harsh welfare reforms during a much

less hospitable economic climate than was the case in the

United States.

The US welfare reforms occurred during a period of

unprecedented economic expansion and record low

unemployment, masking and delaying the true impact

of these “fair weather” welfare reforms. Yet, even in the

context of unprecedented economic growth, many

former welfare recipients have not found jobs.


While this was also true of the pre-reform BC Benefits

legislation, the employment emphasis of the Liberal’s

social assistance system is now much more pronounced,

as is concretely reflected in the program’s new name—

“BC Employment and Assistance.” On the surface, this

kind of “fastest route to a job” strategy (which has been

practiced in Ontario and the US) may sound appealing.

After all, isn’t a job the best form of assistance? The prob-

lem is that while this approach may keep welfare rolls

down, it frequently does little to end poverty or provide

sustainable long-term employment with decent pay for

those leaving social assistance.

In what follows, we review and critique each of the

major BC welfare reforms, highlighting the various im-

pacts and potential harms that may result from the new

rules, and in some cases, the inherent contradictions be-

tween policy initiatives.

Cuts to Rates and BenefitsThe New Policy

• Welfare benefit rates for single parents have been

reduced by $43 per month, while payments to em-

ployable individuals age 55–59 have fallen $47 per

month, those for employable individuals age 60-64

have fallen $98 per month, those of employable cou-

ples age 55–59 have fallen $94, and those

of employable couples age 60–64 have

dropped $145 per month (see Table 1).

• Shelter allowances have been re-

duced for families with three or more

people. Reductions range between $55

and $75 per month. Shelter allowances

for people receiving disability benefits,

single people, and two-person families,

remain unchanged.

• The BC Seniors’ Supplement—a monthly payment

to very low-income seniors intended to ensure a

guaranteed minimum income—is being phased

out. The supplement currently goes to those BC

seniors who qualify for the federal Guaranteed In-

come Supplement (GIS). The gradual elimination

of the provincial supplement will match corre-

sponding increases in the federal GIS to accommo-

date inflation. Thus, the nominal income of sen-

iors will not be reduced. However, BC’s low-income

seniors will, effectively, no longer have their sup-

plements indexed to inflation.

• A number of additional cuts to benefits have been

made, including: the capping of crisis grants (food

at $20 per person per month, shelter at one month’s

allowance, and clothing at $100 per person annu-

ally); the discontinuance of short term homemaker

services previously available to those unable to care

for themselves or for a spouse or dependent child;

the reduction of allowable cash asset levels; the im-

position of a $5,000 limit on the value of a vehicle

under new allowable asset rules; and the elimina-

tion of many work entry assistance benefits (such

as money for work clothes or child care).

PART 3

BC’s New Welfare Rules

AT THEIR CORE, BC’s new welfare policies have as

their central goal cutting government spending,

specifically the MHR budget. This is to be achieved

by denying benefits and pushing people off social

assistance and into the low-wage workforce—a

strategy of quick “labour force attachment.”


• Beginning in the fall of 2003, homeowners who re-

ceive welfare for more than six months will have a

lien instituted against their property. All welfare

payments received by the homeowner after six

months will be treated as a loan. Once the house is

sold, this loan will have to be repaid.44

Critique

Even prior to this recent round of cuts, BC was a far from

generous jurisdiction in terms of support provided

through the welfare system. A single employable person

on social assistance receives a mere $325 per month for

shelter, and $185 for all other living expenses (slightly

more than $6 per day). According to SPARC BC’s calcu-

lations, at these levels, welfare benefits provided only

enough income to cover 45 per cent of a single person’s

minimum living costs, and only 32 per cent of Statistics

Canada’s low-income cut-off.45

Prior to the latest welfare cuts, a single parent with

one child received a support allowance of $377 per month

(about $12.50 per day) plus a shelter allowance of $520—

an amount that covered only 65 per cent of minimum

living costs.46 With the latest reductions to the support

allowance portion of a single parent’s welfare benefits,

these families will now be expected to make do with $43

less each month.47 For many families, this change will

make it practically impossible to make ends meet. In a2002 paper entitled The Cost of Eating in BC, the Dieti-cians of Canada and the Community Nutritionists Coun-

cil of BC warned about the implications of inadequatewelfare benefits. According to this report, those on social

assistance already lack sufficient income to purchase ahealthy diet, and “undernourished children are more sus-ceptible to illness, have diminished attention spans and

are unable to perform at school as well as their nour-ished peers.”48

As indicated above, welfare is composed of two typesof benefits: the support (or living expense) allowance andthe shelter allowance. The inadequacy of welfare as a

whole can be traced back to inadequate benefit levelswithin each of these categories. With respect to the sup-

port allowance, a 2002 report published by SPARC BCdocuments that the value of available benefits has actu-ally been eroding for the last two decades. Between 1982

and 2002, the real (after inflation) value of support al-lowance benefits actually declined by 46 per cent for a

single adult and 25 per cent for a single parent with onechild.49 In other words, welfare recipients could buy lesswith their support allowance in 2002 than they could in

1982. The welfare benefit reductions implemented in 2002have certainly accelerated this trend, further deepening

Single ‘employable’ adult age 18-54 $510 $510 $0 32%



‘Employable’ couple age 18-54 (no children) $827 $827 $0 41%

‘Employable’ couple age 55-59 $921 $827 $94 41%

‘Employable’ couple age 60-64 $972 $827 $145 41%

Single parent, one child $1,004 $961 $43 48%

Single parent, two children $1,201 $1,111 $90 44%

‘Employable’ couple, age 18-54, one child $1,118 $1,071 $47 43%

‘Employable’ couple, two children $1,266 $1,221 $45 40%

Single adult, Disability Level I 3 $608 $608 $0 38%

Single adult, Disability Level II 4 $786 $786 $0 49%

1. Amounts for families with children include the monthly BC Family Bonus ($107 in 2001, and $115 in 2002). The monthly income delivered by the federalgovernment through the Canada Child Tax Benefit is not included in these calculations ($96 per month in 2002, compared to $92 in 2001).2. Statistics Canada before-tax Low-Income Cut-Offs (LICOs) in 2002, for cities of 500,000+ people.3. DBI now called Persons with Persistent Multiple Barriers to Employment (PPMB).4. DBII now called Persons with Disabilities.

Type of recipient2001

benefit rate1

2002

benefit rate1

Monthly

income loss

2002 benefits as a % of

the poverty line (LICO)2

Table 1: Cuts to BC Welfare Benefits


and reinforcing the poverty in which people on welfare

are already living.

Based on market rents for Greater Vancouver—the re-

gion in BC with the largest percentage of welfare recipi-

ents—the shelter portion of welfare is profoundly inad-

equate; it does not allow the majority of welfare recipi-

ents to obtain decent quality housing. Based on rental cost

data from October 2002, the maximum shelter allowance

for a three person household permitted that family to ac-

cess only 0.4 per cent of all two bedroom apartments in

Greater Vancouver, and no three bedroom apartments.50

With further reductions to the shelter allowance, the range

of apartments available to welfare recipients will be even

more constrained. Many families will simply not be able

to find accommodation within shelter allowance maxi-

mums, forcing them to use a portion of the support al-

lowance to cover shelter costs.

In effect, BC’s deplorably low welfare benefit levels force

people to choose between paying the rent and feeding the

kids. They also make it very difficult to pay the cost of

maintaining a phone, or buy bus fare, which severely com-

plicates job-search efforts and socially isolates people.

Older welfare recipients were also hit hard by the

changes in welfare benefits. Recipients aged 55 to 64 used

to receive somewhat higher support benefits than those

under age 55, in recognition of the fact that they face

greater barriers to employment, such as age discrimina-

tion and health difficulties. These differential rates have

now been eliminated—the support allowance of older

“employable” recipients has been reduced by between $47

and $145 each month. In effect, these recipients now get

the same benefits as those aged 19 to 54.

The reduction in crisis grants will mean increased re-

liance on food banks, and potentially more evictions. It

also means low-income people have virtually no state sup-

port for weathering unforeseen events (such as family

emergencies) or unanticipated expenses (such as school

expenses, health costs not covered under Medicare, or an

inability to pay utility bills). The cuts to crisis grants may

also represent a false economy: if low-income people end

up losing stable housing, their ability to hold on to or

find employment is severely undermined.

Similarly, the elimination of many workforce transi-

tion supports for welfare recipients is at odds with the

government’s stated aim of helping people move from

welfare to paid employment. Prior to recent changes,

many recipients were able to access transition-to-work

benefits of up to $150 a month for a maximum of 12

consecutive months, and a workforce entry benefit of up

to $200 to cover incidental costs related to entry into paid

employment. Importantly, transition-to-work benefits

could be used to cover child care costs in excess of the

child care subsidy amount—a key area in which families

experience cost shortfalls. Both of these programs have

now been eliminated.

In addition to the above described (and now absent)

workforce entry supports, those with confirmed jobs were

previously able to apply for a work clothes benefit to as-

sist with the purchase of necessary work clothing, and a

work transportation benefit to assist with essential trans-

portation costs during the first month of employment.

These programs have been replaced with what the BC

government calls the Confirmed Job Program (CJP). The

CJP offers one-time grants of up to $250 to welfare re-

cipients who can prove they have secured a job, but re-

quire assistance to purchase an essential item required to

begin work—such as transportation, safety clothing, or

work boots.

Given the inadequacy of welfare benefits, it is unrea-

sonable to expect recipients to cover additional work-re-

lated expenses out of their basic social assistance support

payments. While $250 may be sufficient for a single per-

son, a one-time payment of $250 may not cover many

work-related expenses incurred by families, particularly

child care in the face of the government’s retreat from

the establishment of universal, affordable, high quality

programming. In effect, the elimination of supplemen-

tary work-entry benefits again illustrates the internal con-

The reduction in crisis grants will mean increased reliance

on food banks, and potentially more evictions. It also means

low-income people have virtually no state support for

weathering unforeseen events (such as family emergencies)

or unanticipated expenses.


tradictions in the government’s welfare platform, and

highlights the overarching goal of budget-cutting.

Under previous BC Benefits legislation, asset rules

permitted welfare recipients to retain a vehicle. Now, “em-

ployable” persons receiving welfare can retain a vehicle

only if the amount of equity they have in that vehicle

does not exceed $5,000. This new rule is surprising given

the increased emphasis in BC Employment and Assist-

ance legislation on job search and training—activities that

may often require transportation to job sites, training

sessions, and interviews. The vehicle asset limit will likely

disproportionately affect welfare recipients in rural and

remote communities, where car ownership is more es-

sential in the absence of sufficient public transit options.

Vehicle asset limits do not apply to welfare recipients with

disabilities, or in circumstances where the vehicle has been

“significantly adapted” to accommodate the disability of

a person in the recipient’s family.

The new policy of treating welfare payments to home-

owners after six months as a loan requiring repayment is

also unduly harsh and petty. Traditionally, asset limits

have applied only to liquid assets. Very few people on

social assistance own their homes. Most likely, this policy

will affect laid-off workers in resource communities who

have used up their severance pay, exhausted their EI cov-

erage, and whose only major asset remains their home

(which, if the community is hard hit, is likely declining

in value). According to MHR figures recently accessed

through a Freedom of Information request, in Novem-

ber 2002, only 2.5 per cent of those receiving temporary

income assistance had equity in a home, and only 2.2 per

cent of those who were on social assistance for six of the

A Word About “Incentives”

The language of “incentives” too frequently dominates welfare debates, and it does the debate a disservice.

A refrain often heard from the Fraser Institute is that we need to “get the incentives right.” Underlying this

language is the presumption that the current system makes welfare too attractive relative to paid employment,

thereby providing an “incentive” for people to stay on welfare rather than look for work.

This notion is absurd. The idea that living on $6 a day can somehow constitute an “incentive” to remain on

welfare is simply outrageous. No one would choose to live on such a meagre income. For single individuals, welfare

provides $510 per month, while a full-time job paying the regular minimum wage of $8 per hour would provide

approximately $1,200 per month.

Ultimately, the language of “incentives” seeks to re-shift the debate from a meaningful discussion about the

economy, the quality and availability of jobs, and the systemic barriers many face to full labour market

participation, and onto the failings of the welfare system and the implied laziness or deficiencies of welfare

recipients. The language of incentives seeks to shift the goal from reducing poverty to getting people off welfare

and into the low-wage labour force as quickly as possible. It is euphemistically saying that welfare should be so

punitive—so harsh and miserable—that no one would want to remain on it, regardless of the poor pay or working

conditions one encounters in the workforce. It may be stating the obvious, but it bears saying—people don’t need

incentives to convince them to take decent-paying jobs or meaningful training opportunities; they only need

“incentives” to take bad jobs or useless training.

In many respects, framing the debate around incentives serves employers and corporations very well, because

reforms aimed at “getting the incentives right” create a pool of thousands of desperate people who have no choice

but to work at minimum wage, often under awful conditions. Not only do employers get a new pool of cheap

workers, but the very existence of this pool helps keep a lid on the wages and demands of existing workers.52

The language of incentives is also linked to the myth of welfare “dependency.” There is always a great deal of

turn-over on the welfare rolls—those on welfare today are not, for the most part, the same people who will be

receiving social assistance tomorrow. A substantial majority of people (approximately 80 per cent) remain on

welfare for less than one year. Moreover, the real (after inflation) value of welfare income has declined over the

past 20 years, so the argument that higher benefits are “trapping” people on welfare does not hold up. As noted

earlier, the key reason welfare caseloads rose in Canada between the late-1970s and mid-1990s is because average

unemployment was climbing and unemployment insurance was being made increasingly inaccessible.


previous 12 months. However, these cases were skewed

towards those in the so-called “Heartland”—while Van-

couver was home to 19.5 per cent of those on social as-

sistance, it was home to only 4.4 per cent of the social

assistance recipients with equity in a home. In contrast,

the Okanagan/Kootenays had 8.9 per cent of all social

assistance cases, but 15.5 per cent of cases with home eq-

uity, Central BC was home to 8.9 per cent of all cases, but

15.2 per cent of recipients with home equity, while Prince

George/Northern BC had 9.3 per cent of the overall

caseload, but 13.4 per cent of those with home equity.51

Elimination of EarningsExemptions and theChild Support Exemption

The New Policy

• Before the new reforms, people on social assistance

could engage in paid employment and keep a por-

tion of that income, know as an “earnings exemp-

tion.” Single people without dependents were enti-

tled to a flat rate earnings exemption of $100 per

month, while people with a disability, couples and

lone parents were entitled to a flat rate exemption

of $200 per month. Any income earned above the

flat rate was subject to a 75 per cent claw-back.53

These earnings exemptions have been completely

eliminated—any income earned will now be de-

ducted dollar-for-dollar from one’s social assistance

cheque. The only exception is for people with dis-

abilities—ironically, the flat rate earnings exemp-

tion for these welfare recipients has been increased

to $400 per month.

• Before the new reforms, a parent on social assist-

ance receiving child support payments from an ex-

partner was entitled to keep $100 per month of this

support. Now, all child support payments are de-

ducted dollar-for-dollar from one’s social assistance

cheque.

Critique

The motivation for these changes appears two-fold. First,

they represent a further attempt to ensure that social as-

sistance income is so utterly minimal that people are des-

perate to exit the system and accept any low-wage, tem-

porary work. Second, the changes are in keeping with the

fiscal imperative driving these reforms, as the Ministry

believes it will save a few million dollars by clawing-back

all supplementary income.

With the cuts to welfare benefit rates and the elimina-

tion of various income exemptions, some low-income

people will experience a dramatic loss of income. For ex-

ample, some single parents who have previously benefited

from both earnings exemptions and child support exemp-

tions could see a drop in their monthly income of ap-

proximately $400—an astounding loss from an already

meagre income.

Earnings exemptions served two important functions.

First, they encouraged social assistance clients to re-

main engaged in the paid workforce. By allowing people

to take on part-time work, earnings exemptions helped

people gain work experience, new employment contacts,

and the added self-confidence that these things build,

thereby improving the likelihood of leaving the welfare

rolls. In addition, the flat rate earnings exemption recog-

nized the fixed costs associated with joining the paid la-

bour force (such as transportation, appropriate clothing,

tools, supplementary child care, etc.). Now, through the

creation of what effectively amounts to a 100 per cent tax

on earned income, the BC government is discouraging

people from experimenting with potential new jobs (in-

cluding those that provide only temporary and part-time

employment). That is why this policy change is so mis-

guided that even the right-wing Fraser Institute objects

to it.

Second, earnings exemptions represented a vital in-

come top-up for people on social assistance. As noted

above, it is virtually impossible to live on social assist-

ance (let alone look for work). Earnings exemptions al-

lowed people to supplement their meagre welfare in-

Some single parents who have previously benefited from

both earnings exemptions and child support exemptions

could see a drop in their monthly income of approximately

$400—an astounding loss from an already meagre income.


comes, and keep food on the table as the month pro-

gressed. Indeed, earnings exemptions are so vital that,

without them, many people are being forced to commit

fraud and hide their income. The elimination of earn-

ings exemptions effectively criminalizes people on social

assistance. If a person on social assistance discloses that

they have income from paid work (as the rules say they

must), the deduction of this money dollar-for-dollar

means they are left with an unliveable income. But, as we

will see below, tough new sanctions for breaking the rules

mean that many will be forced into an untenable Catch-

22. Moreover, forced under the table, welfare recipients

are more likely to find themselves in exploitative work

situations, unable to seek recourse through conventional

employment standards channels.

Ironically, by not only maintaining but also expand-

ing earnings exemptions for people with disabilities, the

Ministry is implicitly recognizing the value of earnings

exemptions as a path to regular employment. However,

they have chosen to provide this benefit only to those

they consider “the deserving poor.”

Also ironically, this new policy represents an instance

in which BC is not borrowing from the US policy

playbook. In fact, as noted above, since the mid-1990s

most US jurisdictions have been moving in the opposite

direction—towards the introduction and expansion of

what they call “earnings disregards” on the grounds that

these earnings exemptions encourage labour force attach-

ment.54 Moreover, BC is now the only province in Canada

that does not allow some form of earnings exemptions

for welfare recipients.55

Exemption for Single ParentsWith Young Children, and Cutsto the Child Care Subsidy

The New Policy

• Employable single parents are now expected to workwhen their youngest child reaches age three, rather

than age seven as was previously the case. As of April

2002, this change affected approximately 8,900 sin-

gle-parent families56 whose status changed from “tem-

porarily excused from work” to “expected to work.”

• Maximum child care subsidy rates for the lowest in-

come families remain unchanged, although the full

subsidy already falls far short of the actual cost of child

care.57 However, the maximum monthly income a

family may have in order to be eligible for the childcare subsidy has been reduced by $185. In addition,

the government will now claw back more of the sub-

sidy from modest income families. These changes

mean that the value of the subsidy has been substan-

tially reduced for many families. For example, a sin-gle mother with one child in licensed group care and

a gross income of $24,300 will now pay $1,534 more

towards her child care per year. As a result of these

changes, over 10,000 families have lost all or part of

their child care subsidy.58

Critique

As is quickly apparent, the two policy changes outlined

above are contradictory. The government is requiring sin-

gle parents to seek work sooner while simulta-

neously making it more difficult to access af-

fordable child care—a fundamental work sup-

port for single parents seeking to re-enter the

labour force. Despite the government’s stated

aim of quickly moving people from welfare to

work, the cut to child care subsidies actually dis-

courages the pursuit of employment, particu-

larly in combination with the loss of other em-

ployment supports and incentives discussed

above.

As is also apparent, these policy changes pri-

marily negatively affect women. Almost all sin-

gle parent families on social assistance are in

fact single mother families, and thus it is these

women and their children who will be dispro-

portionately impacted by these new rules and

the cuts to the child care subsidy.

Table 2: Changes to the Child Care Subsidy

(for a single parent with a 4-year-old in licensed group care)

Gross yearly

income

Hourly

wage1

Old annual

subsidy

New annual

subsidy

Subsidy

change

$12,672 $6.96 $4,416 $4,416 $0

$16,056 $8.82 $4,416 $4,416 $0

$20,184 $11.09 $4,416 $3,674 -$742

$24,300 $13.35 $3,408 $1,874 -$1,534

$28,404 $15.61 $1,908 $74 -$1,834

$32,652 $17.94 $408 $0 -$408

$37,368 $20.53 $0 $0 $0

$41,796 $22.96 $0 $0 $0

Note: 1. Assuming full-time, full year employment.

Source: CCPA calculations based on information from the BC Ministry of HumanResources and the BC Ministry of Community, Aboriginal and Women’s Services.


When cast against the backdrop of the high cost and

limited availability of quality child care that is character-

istic of BC,59 it is not clear what options many single par-

ents will have when their youngest child reaches age three.

In addition to reducing eligibility for child care subsi-

dies, the government has eliminated existing programs

and planned expansions to the child care system put in

place by the previous government (such as low-cost be-

fore and after school care). Already, many quality child

care centres are laying off staff and anticipating closures.

The Coalition of Child Care Advocates of BC found in a

recent survey that “enrolment of children from low and

moderate income families in licensed programs is

down.”60 Many parents are being forced to place their

children in cheaper, unlicensed, and unregulated child

care arrangements, despite the fact that studies continu-

ally demonstrate that these arrangements offer a lower

quality of early childhood development.61

Given that a key plank in the government’s agenda is

workforce participation and attachment, it is especially

puzzling that they have chosen to take money away from

a program that obviously facilitates women’s ability to

access paid employment. Even in a state like Wisconsin

that implemented a strict work-first approach to welfare,

funding and eligibility for child care assistance was sub-

stantially expanded. In BC, in contrast, $50 million is

being cut from child care over a three year period.

These twin policies of increased single parent work

requirements and decreased support for child care also

expose a double-standard common among neo-conserva-

tives; namely, the refusal to adequately fund child care

reveals a belief that women should stay home with their

children, unless they are low-income women, in which

case they are expected to quickly engage in paid work.

These policies also highlight the government’s failure

to appreciate that caring for children (even if unpaid) is

real work, and trying to raise a child without a partner is

particularly hard work. Forcing mothers into jobs in the

paid workforce, particularly in the context of a reduced

$6 “training” wage and limited child care, is simply not

an economically tenable situation for many.

Tightening of Eligibility:“Employment Plans”and the Three-Week Wait

The New Policy

The government’s renewed emphasis on “the fastest route

to a job” has two main components:

• The three-week wait: When a new claimant first ar-

rives at an Employment and Assistance office (the

former welfare offices), under most circumstances,

they can no longer receive assistance right away.

They are given enquiry forms, including “Reason-

able Work Search Guidelines,” instructed to attend

a pre-application orientation, and told to return in

three weeks with evidence of their work search. Only

once this evidence has been reviewed to the satis-

faction of a caseworker (which may in fact take

more than three weeks) will an application for as-

sistance be reviewed to see if an applicant qualifies

for benefits.62

• Employment Plans: New welfare clients must com-

plete an “Employability Screen” and a “Client Em-

ployability Profile.” According to the government,

these instruments are used by a caseworker to iden-

tify a client’s “personal barriers to employment.”63

The profile is then used to develop an individual

“Employment Plan” that sets out the client’s work

search, training and/or workfare obligations. A cli-

ent’s progress through their Employment Plan is

monitored by MHR. Welfare recipients must com-

ply with the conditions in their Employment Plans,

or their benefits will be reduced or suspended.

Critique

For many people, the three-week wait represents a great

hardship. In practice, it is often taking much longer (as

much as six weeks) before welfare workers are satisfied

that an adequate job search has been undertaken. People

without any income are being asked to search for work,

The government is requiring single parents to seek work

sooner while simultaneously making it more difficult to

access affordable child care—a fundamental work support

for single parents seeking to re-enter the labour force.


when in many cases they lack the financial resources to

do so. How the government expects these individuals to

expend time and energy on job searches without money

for food, transportation, rent, a telephone, child care, or

other expenses is certainly far from clear. When applying

for income assistance, people have normally exhausted

their last resources, assets, and prospects. The policy is

also risky in that people without income for nearly a

month (or more) may face evictions. Without secure and

stable housing, a bad situation could turn worse.

Perversely, the three-week wait may also discourage

employment in some cases. Once a person has success-

fully navigated the new requirements and is receiving so-

cial assistance, they may be reluctant to take up a new

but uncertain job opportunity and risk having to go

through the three-week wait again if the job falls through

or proves unacceptable.

The government claims its reforms are designed to

support and encourage employment. However, as we have

seen, many of the cuts actually make the transition from

welfare to work harder.

For example, while the government asserts it will be

offering increased training to help people make the tran-

sition to work, it has substantially reduced its capacity to

deliver training and individualized employment assist-

ance. The MHR says it has committed $300 million for

job training and placement programs over the next three

years, yet this money is to be found within the context of

a $609 million cut to the Ministry’s overall budget. It

seems unlikely, then, that this $300 million is new money.

More to the point, with 36 welfare offices being closed

throughout the province, the elimination of ITAC (the

Industry Training and Apprenticeship Commission that

coordinated apprenticeship training across the province),

the elimination of innovative youth training and employ-

ment programs (such as the Youth Community Action

Program), cuts to the funding of non-profit groups of-

fering training and education, the loss of ESL and adult

high-school completion programming at some commu-

nity colleges, and rising tuition for conventional post-

secondary programs, the government simply cannot de-

liver on its promise of enhanced training and employ-

ment support.

Welfare caseworkers with whom we have spoken view

client Employability Profiles and Employment Plans pri-

marily as mechanisms for the Ministry to categorize and

subsequently monitor clients—not as a means of pro-

viding genuine individualized support. These workers

also report that the capacity to deliver meaningful train-

ing has been significantly reduced. One described the new

system as merely consisting of “quick referrals to McJobs.”

Another said the profiles provide information, but work-

ers can’t actually deliver the help this information calls

for. She too sees the emphasis being on “the shortest route

to any job,” and worries about how sustainable such em-

ployment would prove to be. Another caseworker also

said that training counsellors don’t have access to budg-

ets or good programs that would help to provide the train-

ing needs revealed by the employability profiles.

The new emphasis on Employment Plans also mis-

represents the reality that most people—regardless of the

rules—do not remain on social assistance for very long.

According to analysis by the MHR covering most of the

1990s, 49 per cent of all income assistances cases received

benefits for three months or less, while 81 per cent of all

cases received social assistance for 12 months or less (al-

though some of these cases subsequently cycled back onto

the rolls).64 Thus, in most cases, the new employment

obligations will make very little difference (beyond forc-

ing people to jump through more hoops, and possibly

convincing a few folks that couch surfing or living on the

street is less grief than navigating the welfare system).

Most people rely on social assistance for very short peri-

ods to see them through difficult times. Those who re-

main on assistance for longer generally do so because of

a lack of available jobs, because they face discrimination,

or because they face much more challenging barriers to

employment—barriers that the new job search and

For many, the three-week wait represents a great hardship.

People without any income are being asked to search for work,

when in many cases they lack the financial resources to do so.

When applying for income assistance, people have normally

exhausted their last resources, assets, and prospects.


employment plans will do little to alter unless real re-

sources are directed towards helping people deal with very

serious challenges relating to housing, addiction, educa-

tion, disabilities, social problems, etc. This seems unlikely

given the overarching fiscal imperative and cutbacks driv-

ing the changes.

Over the coming months and years, the government

will be keen to point to exit surveys and other statistics

allegedly showing how successful its reforms have been

at moving people from welfare to work. These figures

should be read and interpreted with great caution. In

many cases, quick “labour force attachment” and employ-

ment programs simply place the easiest-to-employ (the

people who would have found work relatively quickly

without help) into paid work, and then falsely claim these

placements represent a great success. As End Legislated

Poverty’s Lesley Moore notes, given that so many people

remain on social assistance for relatively short periods of

time in any event:

…it makes little sense to develop back-to-work

programs for them—particularly when many will

likely find work on their own without help from

the Ministry. In the long run, it may be more cost

effective to simply grant the income assistance and

employment supports people actually need, rather

than send thousands of clients to pre-employment

programs that they can’t use, don’t need and may

not want.65

Those who favour the “fastest route to a job” approach

often ask rhetorically: “But isn’t any job better than no

job?” In truth, the answer is “Not necessarily.” Not if the

job, rather than being a “foot in the door,” proves to be a

dead-end. Not if the pay fails to adequately compensate

for the work effort, the health hazards, or the working

conditions. Not if a job takes you away from caring for a

child or another dependent (particularly if child care or

home care is unaffordable). And, if you are a single par-

ent, a minimum wage job just doesn’t meet your basic

needs.

People need to be treated as individuals with unique

needs. Sometimes, it may make more sense for the social

assistance system to invest the extra time and money into

helping a person develop the skills that can only be ac-

quired through a longer-term apprenticeship or post-sec-

ondary program, which will then lead to higher-paying

and stable employment.

The fundamental problem with workfare—requiring

people to participate in training programs or to accept

work placements in order to receive welfare benefits—is

the element of coercion. When decent work or meaning-

ful training is on offer, coercion is unnecessary—people

flock to it. Moreover, such requirements undermine the

wages and bargaining power of those already toiling in

the low-wage workforce.

Two-Year Time Limits: Endingthe Entitlement to Welfare

The New Policy

• Employable participants are limited to a cumula-

tive two years of income assistance out of every five

years. All months on income assistance after April

1, 2002, count towards this limit. Once the two-year

time limit has been exhausted, income assistance

will be discontinued for employable singles and

couples without children, and reduced by $100 per

month for single parents and by $200 for two-par-

ent families.66

Critique

Imposing time limits on the receipt of welfare is a puni-

tive strategy designed to lower welfare caseloads and to

reinforce the notion that welfare is a temporary form of

assistance without any real concern for the well being of

low-income people. This new rule is unprecedented in

Canada in that it denies welfare when in need as a basic

right, and undercuts what little of the social safety net

remains for low-income people. This fundamental shift

in Canadian social policy is modelled on the US, although

the BC government has introduced a unique twist.

While US states now have five-year lifetime limits on

welfare, none have adopted BC’s strategy of two-year time

limits within a five-year period. (Three states—Arkan-

sas, Connecticut and Idaho—have lifetime time limits of

two years or less, and Ohio limits benefits to three years

within any five-year period.) Moreover, as noted in Part

2 above, US states have the discretion to exempt many

families from being cut off welfare due to time limits.67

In Wisconsin, a state that has undergone one of the

most stringent welfare restructuring processes in North

America, welfare recipients must move from one stage of

the welfare system to another every two years, but they

have five years before they are obligated to exit the sys-

tem altogether.

Data from Ohio, a state that implemented its three-

out-of-five year limit in 1997, offers some early


indication of what may be awaiting BC. Ohio’s Center

on Urban Poverty and Social Change examined data from

state and county sources, and conducted extensive inter-

views with welfare leavers—both those who left volun-

tarily and those forced off the welfare rolls upon hitting

their three year time limits after October 2000. The

Center’s study found that:

…persons who leave welfare because of time lim-

its are worse off than those who have left for other

reasons. It is important to note that this finding

cannot be interpreted as evidence that time limits

are responsible for the relative disadvantages faced

by the time-limited leavers. Rather, the imposition

of time limits has served as a sorting mechanism,

resulting in the most employment-ready welfare

recipients leaving welfare prior to hitting time lim-

its, and the most challenged exiting upon hitting

their limits.68

The study notes in particular that:

• In October 2000, there was a spike in the number

of welfare exits as a result of people hitting their

three-year time limits;

• Continued use of food stamps and Medicaid is

much higher among time-limited welfare leavers

than among voluntary welfare leavers;

• With respect to income, “time-limited leavers are

worse off in every measure than the non time-lim-

ited leavers… Time-limited leavers have an aver-

age monthly income of $869, over $400 less than

their non time-limited counterparts”;

• Time-limited leavers were more likely to be evicted

than non time-limited leavers; and

• 78 per cent of time-limited leavers were employed

at some time during the six months following their

exit from welfare, while over 90 per cent of non

time-limited leavers worked at some time. “Find-

ing steady employment and full-time status has

proven problematic for all leavers, but particularly

time-limited leavers.” Only 32 per cent of time-lim-

ited leavers found continuous employment of at

least 20 hours per week.69

Furthermore, and of great concern to the study au-

thors, all of these measures of hardship faced by time-

limited leavers were for a period prior to the 2001 eco-nomic downturn.

Other studies on the impact of time limits are startingto emerge, mainly from states with time limits of less than

five years. However, all cover a period of record low un-

employment, and, subsequently, all likely report higherrates of employment among those leaving welfare than

would be the case today. According to one literature re-view, “The post-exit employment rates of time-limit

leavers vary widely across states, ranging from less than

50 per cent to more than 80 per cent.”70 It is importantto note that because the US allows earnings exemptions,

many of these leavers were actually working before theyleft welfare. Indeed, the earnings exemptions (now elimi-

nated in BC) may have helped with the transition to work.

Also, large numbers of time-limit leavers continue to relyon Food Stamps and other forms of assistance—options

that will not be available in BC. Finally, these studies notethat homelessness has been rare among time-limited

leavers, but food insecurity and other hardships are not.71

Overall, few families have reached their limits in the US,and data remains very sketchy.

Of note, the US administration recognized that somepeople would need help beyond the five-year time limit

for legitimate reasons, and thus the US legislation has

some flexibility built into it. Specifically, states are per-mitted to exempt up to 20 per cent of families from the

time limit rule. In other words, the Americans anticipated

some problems from the start, and were prepared to make

Time limited assistance will clearly help the government

achieve its desired drop in the welfare caseload, insofar as

people will be cut off regardless of their employment status

or the hardship that may result. Many will likely be forced

to depend on emergency services, community-based

assistance, friends and family to make ends meet.


necessary adjustments. The BC government has, to date,

shown no such flexibility.

The impending threat of being cut off welfare is de-

signed to push people back into the low-wage labour

market as quickly as possible. Posters announcing the new

rule are now prominently displayed in all BC welfare of-

fices. When asked to explain what will happen to people

who hit the limit over the coming years, Human Resource

Minister Murray Coell refuses to answer—at this time,

he does not want to outline any possible exceptions or

entertain any willingness to reconsider the policy, likely

for fear that such signs of flexibility will undermine the

credibility of this new threat.

Time limited assistance will clearly help the govern-

ment achieve its desired drop in the welfare caseload, in-

sofar as people will be cut off regardless of their employ-

ment status or the hardship that may result. People will

cease to be eligible for welfare even if they have been un-

able to find paid employment after complying with all of

the requirements of their Employment Agreement. They

will cease to be eligible even if the low-wage and part-

time jobs that welfare leavers often cycle through do not

provide sufficient income to cover basic expenses. Given

that the government has chosen to implement this harsh

reform in the context of an economic slowdown (par-

ticularly in resource-dependent communities), many

people will likely be forced to depend on emergency serv-

ices, community-based assistance, friends and family to

make ends meet—resources that in many cases are al-

ready very stretched due to the cutbacks. In all likelihood,

this new rule will result in increased homelessness, hun-

ger and desperation, and all the social ills associated with

these consequences.

Post-Secondary StudentsUnable to Access Welfare

The New Policy

• Full-time students in programs eligible for BC Stu-

dent Financial Assistance (loans) are no longer eli-

gible for income assistance (with the exception of

people with disabilities).

Critique

The fact that students are no longer eligible to receive

welfare benefits is distinctly reminiscent of Kimberly

Rogers—a pregnant woman who committed suicide

while under house arrest in Ontario in the summer of

2001 after being convicted of welfare “fraud” for the

“crime” of claiming welfare while also receiving student

loans. Rogers was trying to improve her life by attend-

ing a local community college, and had recently gradu-

ated with honours from the social work program.

At a time when the tuition freeze has been abandoned

and BC students are facing skyrocketing increases in the

cost of pursuing post-secondary education, the govern-

ment has eliminated the possibility of allowing students

to obtain welfare while they advance their skills and edu-

cation. Given the government’s stated claim that it rec-

ognizes the importance of an educated workforce in this

new “knowledge-based” economy, and its alleged com-

mitment to helping people on social assistance get the

skills they need to find employment, this policy move

makes little sense.

“Quick–and–dirty” job skills frequently fail to pro-

vide people with the experience they need to secure sta-

ble, long-term, and life-sustaining jobs. The key to find-

ing such employment is often a post-secondary diploma

or degree. It may take longer, but the pay-off—for both

the individual and the provincial treasury—is signifi-

cant.72 What the government is effectively saying with

this new policy (in combination with rising tuition), is

that it is not willing to help low-income people gain ac-

cess to long-term, decent-paying jobs.

The Fraser Institute claims that the US experience

demonstrates that welfare programs emphasizing quick

labour force attachment have been more successful at

reducing welfare rolls than programs emphasizing

training and education.73 The evidence it points to,

however, merely compares workfare schemes to basic

job training programs (which often deal with different

populations facing different challenges). The US gov-

ernment General Accounting Office, which the Fraser

Institute relies on as a source with respect to other is-

sues, upon reviewing the records of various welfare-

to-work programs, concluded that “the outcomes…in

the two approaches were not different enough from

each other to conclude that, overall, one approach is

more effective than the other.”74 The GAO also specifi-

cally warns that these comparison studies have not ex-

amined the benefits of long-term post-secondary train-

ing.

Like the new BC policy, the 1996 US welfare reforms

also discouraged the pursuit of a post-secondary degree.

In addition to imposing a five-year time limit, the US

law allows only one of those years to be used for


education (too little time to pursue a post-secondary

degree or diploma). As a result of these restrictive rules:

…many [welfare] recipients looking immediately

for work got jobs in the booming economy of the

1990s—but these were often low-wage, dead-end

jobs. Now, in a recession, the retail, restaurant and

hotel industries that hired many welfare recipients

are those with the most employment losses. Wel-

fare recipients, the last hired, have been the first

fired. In the long run, it might have been wiser for

more recipients to improve their skills before going

to work. With more education, they might have

been able to keep jobs in bad times as well as good.75

In a review of the “Lessons Learned” from 1990s wel-

fare reforms and evaluation studies, Human Resources

Development Canada finds that “In the long run, short-

term labour market skills training (e.g. job search tech-

niques, resume writing, interview coaching) and quick

placement approaches do not seem to support clients with

a poor education in gaining economic independence.”76

What HRDC’s review concludes instead is that:

Education is important for moving beyond low-

wage jobs… Better-educated individuals have a

lower incidence of unemployment, greater number

of hours worked and earnings per hour, and less

reliance on government support programs…

Eliminating support for long-term training denies

individuals an opportunity to gain skills and edu-

cation that could lead to higher wages and long-

term employment.77

Likewise, a 2002 study from the University of Michi-

gan’s Centre for the Education of Women found that, by

pressuring recipients to stay in dead-end jobs even if they

wanted to pursue post-secondary studies, the state’s wel-

fare system denied clients a chance to secure better-pay-

ing jobs. The study states that Michigan’s welfare policies

contradict research that “overwhelmingly demonstrates

that postsecondary education is the most effective way

for a low-income person to become self-sufficient

through long-term employment.”78

The Two-YearIndependence Rule

The New Policy

• Applicants age 19 and over are now required to

demonstrate that they have been financially inde-

pendent for two consecutive years (including any

time spent receiving unemployment insurance ben-

efits) before they are eligible to apply for welfare or

qualify for hardship assistance.

Critique

There is no defensible rationale for requiring people to

have two consecutive years of work prior to claiming

welfare. Like the two-year time limit, the two-year inde-

pendence test represents a Canadian first—another fun-

damental repudiation of welfare as a right when in need.

This rule essentially tells people that once they have left

home, they must either enrol in a post-secondary educa-

tional program (an option that is now financially out-

of-reach for many) or work (no matter what the pay,

working conditions, or availability of local employment).

This rule may well result in more young people living

on the streets, and has the potential to cause profound

social harm. Indeed, some social agencies that work with

young people are already reporting an increase in the

number of street kids. In the winter of 2003, for exam-

ple, the Dusk to Dawn youth drop-in centre in Down-

town Vancouver reported that the number of youths us-

ing its facilities had reached 75 per night, up from an av-

erage of 40–50 per night six months earlier (itself an in-

crease over the previous year), a change Deena Franks of

Family Services of Greater Vancouver attributes in part

to BC’s new welfare rules. The Vancouver police have also

noted an increase in the number of youth sleeping on

the street.79

Exempted from this rule are people with disabilities

and those designated as facing persistent multiple barri-

ers to employment, people who are pregnant or have a

dependent child, spouses who have been supported by a

“Quick–and–dirty” job skills frequently fail to provide people

with the experience they need to secure stable, long-term,

and life-sustaining jobs. The key to finding such

employment is often a post-secondary diploma or degree.


partner for a period of two consecutive years, people who

were incarcerated in a correctional institution for over

six months, people who were in the care of the Ministry

of Children and Family Development when they turned

19, people who hold a post-secondary diploma or de-

gree, and people leaving an abusive family situation.

While this rule applies to all other employable adults,

it is, in effect, aimed at young adults, since it is primarily

this group that will not have had time to accrue the req-

uisite two years of paid employment. This new rule is

clearly discriminatory, as it essentially penalizes young

people for the fact of being young.

While the new policy exempts people leaving abusive

family situations, in practice this may be difficult to prove

to the satisfaction of caseworkers (the regulations do not

define abuse). Accordingly, it may actually serve to esca-

late the risks faced by youth in abusive environments.

People with Disabilities

The New Policy

The government has made significant changes to the

welfare system for people with disabilities.

• As of September 30, 2002, the Disability Level One

benefit category (DBI) has been replaced with the

designation “Persons with Persistent and Multiple

Barriers to Employment” (PPMB). Former recipi-

ents of DBI were required to reapply under the new

PPMB criteria. To qualify, an applicant must have

been on income assistance for at least 12 of the pre-

vious 15 months. They must also pass an “employ-

ability screen” to be conducted by a Ministry Em-

ployment and Assistance worker, or be found to

have a medical condition that precludes them from

working. Applicants must provide the Ministry with

medical documentation that their health condition

has lasted for one year and will likely continue for

two or more years, or has frequently occurred in

the past year and is likely to keep occurring fre-

quently for two or more years. Applicants must also

demonstrate that they have taken all reasonable

steps to overcome their barriers to employment.

Individuals who do not meet these requirements

will have their benefits reduced to the basic income

assistance rate three months after their assessment

(the PPMB monthly benefit rate for a single per-

son is $608, while the basic income assistance rate

is $510). Unlike benefits for “employable” adults,

PPMB benefits are not time limited.

• As of September 30, 2002, the Disability Level Two

benefit category (DBII) has been replaced with the

new designation “Person with Disabilities” (PWD).

Thousands of people currently receiving DBII have

had to re-establish their eligibility for this form of

assistance by completing a 23-page reassessment.

This document includes sections to be filled out by

the applicant, the applicant’s doctor, and a quali-

fied “assessor” (a registered health professional, e.g.

physical or occupational therapist, psychologist,

social worker, etc.). The form focuses on the de-

gree to which applicants can perform the tasks re-

quired for daily living as defined in the Employment

and Assistance for Persons with Disabilities Regula-

tions. However, there is no longer any considera-

tion in the legislation of the amount of time it takes

a person to perform these tasks independently. Per-

sons found ineligible for PWD will have their ben-

efits reduced to the basic income assistance rate, or

to the PPMB rate pending qualification for a PPMB

allowance (the monthly PWD benefit rate for a sin-

gle person is $786). Although PWD benefits are not

time limited, it is also no longer a permanent des-

ignation—the Minister retains the ability to take

away PWD status from a recipient.

• “Unusual and continuous costs” are no longer a part

of the definition of disability. Under the previous

legislation, people could qualify for disability ben-

efits if they could demonstrate that they required

assistance with daily tasks or if they had disability

related costs. Under the new legislation, the cost cri-

terion has been removed, meaning that the amount

of money a person must spend on the care or man-

agement of his or her disability has no bearing on a

welfare application.

• As noted briefly above, the criterion of requiring

assistance with daily living activities no longer

makes reference to time. The clause “performing

tasks within a reasonable amount of time” has been

removed.

• As discussed above, the flat rate earnings exemp-

tion for people with disabilities receiving benefits

through either the PPMB or the PWD programs

has been increased to $400 per month.


Critique

The move to the PPMB and PWD benefit classifications

will likely result in the denial of disability benefits to thou-

sands of former recipients of DBI and II, both as a result

of new bureaucratic hoops that applicants must jump

through, and the more stringent definition of disability

that focuses on ability to perform the tasks of daily liv-

ing. Given that rates of poverty among disabled people

are already high, this outcome will clearly create addi-

tional hardship.

With respect to PPMB benefits, the preoccupation with

moving welfare recipients into the workforce remains

prominent. This is clearly evident in the fact that former

recipients must now re-establish their eligibility for as-

sistance by proving they have “severe multiple personal

barriers to employment” and by going through an “em-

ployability screen.” However, this new focus on employ-

ability does nothing to address other factors that impinge

on the ability of disabled people to find work, notably

the high rates of unemployment among the disabled

population, the physical or other barriers to accessing em-

ployment that many disabled people face, and discrimi-

nation.

On January 2, 2003, the Ministry of Human Resources

announced that the point system it set up for the PPMB

“employability screen” was being reviewed. Its initial

structure was such that few people formerly classified as

DBI could pass the new test for PPMB eligibility. This

review process is now over, and employment and assist-

ance workers have been given slightly more discretion to

recommend PPMB status based on information provided

by an applicant’s doctor. However, questions remain

about how the screen will treat people with mental dis-

abilities, progressive disabilities, addiction problems, or

those who are capable of minimal work but not enough

to support themselves. Advocates for the disabled still fear

that many former DBI clients will be moved to “employ-

able” status because of the strict new criteria—a change

that will have serious implications for their health and

well-being.

The requirements that PPMB applicants: a) have been

on assistance for 12 of the previous 15 months; and b)

prove they have a medical condition that has lasted at

least one year and is likely to last for two more, are a huge

problem for new applicants. They serve to disqualify peo-

ple with new or short-term disabilities from extra ben-

efits. The first of these rules should be abolished, and the

second reduced to six months.

For persons currently receiving DBII, the elimination

of any consideration of the time it takes to perform the

tasks required for daily living is extremely problematic.

Without this consideration, the definition of disability

now used to determine eligibility for PWD focuses solely

on functionality—whether or not an applicant can actu-

ally complete a specified list of tasks without assistance.

This move to a functional definition of disability will have

a particularly negative effect on people who struggle to

remain independent despite the difficulty of performing

daily living tasks. For example, a person may be consid-

ered capable of performing a daily living task such as feed-

ing oneself, even if it takes many hours to do so. This

struggle is compounded by the limited availability of

home support services, supported housing, and sup-

ported employment.

The reassessment process set up by the Ministry for

recipients of DBII is particularly onerous. The creation

of a 23-page form for the establishment or

reestablishment of eligibility is certainly overkill, not just

for those benefit recipients who must complete it, but

also with respect to the Ministry resources required to

review these forms and make decisions concerning eligi-

bility. Presumably the government considers this process

worthwhile because it expects to generate a cost savings

by denying thousands of people access to PWD benefits.

While the Ministry publicly insists it has no target for

disability caseload reduction, Georgia Straight columnist

The move to the PPMB and PWD benefit classifications

will likely result in the denial of disability benefits to

thousands of former recipients of DBI and II, both as a

result of new bureaucratic hoops and the more

stringent definition of disability.


Bill Tieleman reported on a confidential document indi-

cating that MHR expects that about 9,000 former DBII

clients will fail to re-qualify for PWD status.80 Achieving

such caseload reductions on the backs of a particularly

vulnerable segment of the population is a shameful and

punitive exercise.

A further concern about the extremely lengthy reas-

sessment forms is that disabled people will find it difficult

to find and/or convince doctors and other health profes-

sionals to take the time to complete the relevant sections.

This is a particular concern for those who do not currently

have a family doctor familiar with their condition and the

limitations it imposes. In addition, restrictions on access

to medical professionals such as psychologists and occu-

pational or physical therapists imposed by recent changes

to the Medical Services Plan will make it more difficult

for applicants to obtain the assistance they need from these

people.

The extensive data required for the reassessment proc-

ess, in combination with changes to the welfare appeals

system (discussed in more detail below), make it unclear

how this information will be used in the adjudication proc-

ess. Appointees to the Employment and Assistance Ap-

peals Tribunal are now charged with the task of determin-

ing not only the correctness of the information presented,

but also its reasonableness. This means that appointees

may be responsible for the medical interpretation of the

form—a task they are likely not qualified to perform.

Of the 62,000 former DBII clients, approximately

14,000 were sent the 23-page questionnaire in the fall of

2002—so far, it seems that the remainder have been ex-

empted from the review process.81 According to the BC

Coalition of People with Disabilities, the re-assessment

process seems to be targeting those suffering from depres-

sion, chronic fatigue, fibromyalgia, soft-tissue damage,

back pain, learning disabilities, some forms of arthritis,

and some of the mentally ill.82 As of February 2003, ap-

proximately 10,000 PWD reassessment forms had been

returned to the Ministry. Four thousand were still out-

standing—particularly among those having significant

difficulties getting the required documentation of their

disabilities.

Overall, both the PPMB and PWD re-application proc-

esses have left thousands in a state of high anxiety—afraid

that if they answer questions incorrectly they will lose their

welfare entitlements. In February 2003, the BC Coroner’s

Office issued a report into the suicide of a Burnaby man,

and concluded that receipt of the 23-page PWD reassess-

ment form had been a contributing factor in the man’s

death.83 Advocates for the disabled report that this case

is not unique—that there have been numerous suicides

and attempted suicides as a result of the reassessment

process. Moreover, people who are granted disability ben-

efits will, from now on, have this status reviewed every

two to five years, as the “permanent” designation has been

removed.

Finally, as we have seen with other policy changes, the

disability changes represent a Catch-22 for some disa-

bled welfare recipients: on the one hand, people are be-

ing encouraged to pursue the goal of independent living;

on the other hand, if they are moderately successful in

this endeavour, they risk losing some or all of their in-

come support.

Sanctions

The New Policy

As part of its welfare reform package, the BC government

has adopted a system of harsh penalties for people who

do not comply with strict new employment search and

other requirements, or who fail to declare other sources

of income.

• For quitting a job without cause or being fired with

cause, families with children have their benefits re-

duced by $100 for two months, and those without

children are disqualified for two months. For fail-

ure to demonstrate reasonable work search, fami-

lies with children lose $100 for one month, and

those without children are ineligible for one month.

For failure to comply with an employment plan,

the whole family may become ineligible. For fail-

ure to pursue income or assets, families are sub-

jected to a reduction of $100 for lone parent fami-

lies and $200 for two parent families for one month

for each $2,000 of the value of the income/asset.

Those without children are ineligible to receive ben-

efits for one month for each $2,000 of the value of

the income/asset.

• Individuals convicted of welfare fraud under the

Criminal Code will now be banned from receiving

assistance for life. Individuals convicted of fraud

under the Employment and Assistance Act face a one-

year disqualification for a first offence, a two-year

disqualification for a second offence, and a lifetime

disqualification for a third offence. Admitted fraud

of a less serious nature will result in disqualifica-

tion periods of three months to a year.


• There has been an overall increase in monitoring

measures and requirements to provide documen-

tation regarding relationships, job and volunteer

performance, finances, and so on.

Critique

This kind of punitive, zero-tolerance approach to wel-

fare fraud contributed to the death of Kimberly Rogers

in Ontario. In a precedent-setting ruling, however, Rogers

succeeded in obtaining an interim order restoring her

welfare benefits until her full case could be heard (al-

though she remained under house arrest). The interim

order was granted by Justice Gloria Epstein based on an

argument that a lifetime welfare ban constituted “cruel

and unusual punishment” as prohibited by the Charter

of Rights and Freedoms. Unfortunately, the full Charter

challenge was dropped upon Ms. Rogers’ death, so the

constitutionality of lifetime bans on welfare benefits will

not be challenged until another unfortunate person faces

this harsh penalty. It seems that BC may have the dubi-

ous distinction of being the next jurisdiction in which

this comes to pass.

A coroner’s inquest was launched to investigate the

death of Kimberly Rogers. After eight weeks of testimony

the coroner’s jury concluded that the lifetime welfare ban

was a contributing factor in Rogers’ suicide. The jury also

determined that this rule would have a “devastating and

detrimental effect on our society” and, accordingly, should

be scrapped.84 It is alarming to say the least that the BC

government has chosen to disregard what was learned at

such a high price from the Rogers case.

The utility of dedicating more resources to the vigor-

ous pursuit of “welfare fraud” is questionable at best given

that Canadian and international research has repeatedly

documented overpayment and fraud in fewer than 5 per

cent of cases, and often for amounts less than $100. In

fact, studies suggest that investigators are more likely to

uncover evidence of benefit underpayment than cheat-

ing on the part of recipients.85 The government also ap-

pears to be taking a harsher and more punitive approach

to “welfare fraud” than it does towards “white-collar”

fraud.

BC’s new sanctions are particularly harsh in light of

the fact that, as discussed above, social assistance income

in this province is effectively unliveable. The tough sanc-

tions approach essentially constitutes a Catch-22: People

cannot meet their basic needs on a welfare income, but if

they seek to supplement their income and are caught,

they lose their benefits.

Privatization

The New Policy

It is unclear to what extent the BC government is inter-

ested in privatizing parts of the welfare system. Thus far,

the MHR has granted a contract to the consulting firm

KMPG to produce a feasibility study of various privati-

zation and computerization options, with the goal of

making the best use of modern technologies to deliver

welfare services more efficiently. Many anti-poverty ac-

tivists are concerned that BC will go the route of On-

tario, which contracted with the Bermuda-based firm

Accenture (formerly Andersen Consulting) to produce a

new computer and 1-800 telephone system for manag-

ing welfare inquiries and cases.

Critique

Leaving aside the distasteful notion of large corporations

profiting from poverty, there are many practical prob-

lems with privatizing welfare delivery.

First, there is evidence from a number of jurisdictions

that a key way in which private firms profit from welfare

is by denying people coverage, including cutting people

off who are, in fact, entitled to benefits. Typically, priva-

tization contracts see private firms paid from the

“savings” they produce for the contracting government.

In the case of Accenture in Ontario, social justice activ-

ists report that the key to welfare caseload drops was the

introduction of a 1-800 phone system that was so com-

The tough sanctions approach essentially constitutes a

Catch-22: People cannot meet their basic needs on a

welfare income, but if they seek to supplement their

income and are caught, they lose their benefits.


plicated to navigate, many low-income people entitled to

benefits (particularly those for whom English was not

their first language) failed to qualify simply because the

system was too user-unfriendly.86 Welfare clients in On-

tario no longer have individual caseworkers. Rather, each

time they interact with the system they must deal with a

new telephone operator (or computer), and if they fail to

provide the requested information correctly they must

start again from the beginning.87

Second, many welfare contracts with private firms have

been harshly criticized by local auditors-general in both

the US and Canada for their extremely high billing rates,

cost over-runs, delays, and failures to deliver what was

promised. Most recently, Ontario’s Auditor-General, Erik

Peters, harshly criticized the Accenture deal, stating:

We consider the over $400-million cost of the newwelfare delivery system, of which over a quarter of abillion dollars was paid to Accenture, as substan-

tial, particularly since it will take much more timeand many more taxpayer dollars to bring the sys-tem up to the state where only eligible welfare re-cipients are paid in the correct amount. At the timeof our audit, the system contained significant flaws.88

Peters also notes that, despite the original promise that

Accenture would only be paid from the savings produced,

“Accenture was paid millions of dollars before the so-

called benefits exceeded costs. In fact, we concluded that

the taxpayer took virtually all the financial and perform-

ance risks of this project and Accenture reaped a dispro-

portionately large share of the financial rewards.”89 Dis-

turbingly, Accenture has not been alone in such failings.

Similar problems have been reported with respect to other

private firms delivering welfare services, such as EDS in

Florida and Indiana, and Lockheed Martin and Unisys in

California.90

Third, privatization may erode public accountability.

Private firms are generally not required to disclose all their

internal documents, as government departments must

under Freedom of Information laws, and they frequently

argue that such disclosure would undermine their posi-

tion vis-à-vis their competitors. This lack of accountabil-

ity can pose problems for public interest researchers and

others seeking to determine whether all those who deal

with private welfare firms are being treated fairly.

Finally, there is the problem of “skimming.” One pri-

vatization model sees governments contracting with pri-

vate firms to provide welfare clients with training and job-

placements. However, as previously discussed, most peo-

ple do not remain on welfare for very long, with or with-

out outside help. Thus, there is a risk that governments

end up paying private firms for the unimpressive task of

finding jobs for the easiest-to-employ (those who face the

fewest barriers to employment).

Appeals Process Changesand the Elimination ofPoverty Law Legal Aid

The New Policy

Under the Employment and Assistance Act, the process for

appealing decisions about the denial, discontinuance, or

reduction of welfare benefits in BC has been significantly

changed.

• The BC Benefits Appeals Tribunal and the BC Ben-

efits Appeal Board have been replaced with a single,

regionally-based entity: the Employment and Assist-

ance Appeals Tribunal. This change constitutes a sig-

nificant reduction in available options for review.

• According to the Restructuring Administrative Jus-

tice Agencies report from February 2002, the BC gov-

ernment also intends to focus resources on improv-

ing initial decisions made at local offices. This will

supposedly be accomplished by “enacting more pre-

cise regulations, providing better staff training and

improving accountability.”

• Poverty law legal aid has been completely eliminated

in BC. Low-income people with poverty law ques-

tions or complaints—such as those wanting to chal-

lenge welfare, EI or WCB rulings—now have access

only to a province-wide toll-free telephone service

and limited online resources from the Legal Serv-

ices Society, the body responsible for administering

legal aid.

Critique

Under the former welfare appeal system, there were four

levels of review:

1. reconsideration of a decision by local workers/dis-

trict supervisors;

2. Appeal Tribunal proceedings to review whether the

legislation and regulations have been appropriately

applied;

3. Appeal Board proceedings to review questions of

law; and

4. Judicial Review by the BC Supreme Court.


The move to create a single review entity by collaps-

ing stages (2) and (3) constitutes a significant “stream-

lining” of available venues for external review of deci-

sions concerning access to and levels of welfare benefits.

A key difference under the new system is that welfare re-

cipients will no longer be able to turn first to a commu-

nity-based appeal tribunal composed of one person they

nominate, one person nominated by the Ministry, and a

chair chosen by these two nominees. The new Employ-

ment and Assistance Appeals Tribunal is composed of

chairs and members solely appointed by the Minister of

Human Resources. The Ministry has also explicitly stated

in its recruitment ad that people who receive welfare or

disability benefits are not eligible to serve as tribunal

members—a blatant example of discrimination on the

basis of income and class.

According to the MHR Service Plan and the govern-

ment’s Restructuring Administrative Justice Agencies re-

port, the decision to “streamline” the welfare appeal proc-

ess was motivated in part by concerns about the timeli-

ness of review processing. In this vein, the Service Plan

suggests that a “performance measure” of the new Em-

ployment and Assistance Appeals Tribunal will be the

average time it takes to process an appeal. This under-

lines the fundamentally wrong-headed way in which the

government is using outcome measurement. Evaluating

changes on the basis of processing time says nothing

about how these changes impact the quality of the ap-

peals process, the validity of the decisions, whether cli-

ents are able to access the appeals system, whether clients

are being treated fairly and equally, and so on—all mat-

ters about which the government should be concerned.

The focus on improving the fairness of initial deci-

sions at local welfare offices also sits uneasily beside other

changes to the welfare system, particularly the dramatic

reductions in the number of Ministry staff and the clo-

sure of many regional offices. As noted previously, with

fewer people serving welfare recipients, it will be diffi-

cult for the government to realize its rhetoric regarding

more individualized services and employment assistance.

Staff reductions will translate into fewer people and less

time available for the reconsideration of welfare decisions.

In practice, “more precise regulations” may function as a

euphemism for more narrowly prescribing available

courses of action in the legislation, thereby diminishing

the capacity of remaining local staff to work with their

clients to forge an appropriate solution. Given that the

majority of complaints were typically resolved at the lo-

cal level, this constitutes a significant loss. If anything,

welfare caseworkers with whom we have spoken indicate

they now have less discretionary power to help people,

and that they feel a tremendous internal pressure to meet

targets for lower caseloads—a reality that points to a need

for an expanded appeals system.

With the elimination of legal aid funding for advice or

representation on poverty law matters, welfare applicants/

recipients who believe they have been treated unfairly will

clearly be at a disadvantage in the appeals process. With-

out the means to retain a private lawyer (if indeed they

could find one given the very small number who handle

poverty law cases), legal aid was a primary resource

through which some of the poorest people in BC could

get assistance on the legal issues that structure their lives.

The likely outcome will be increased demands on lay pov-

erty law advocates with non-profit organizations in BC—

just as many of these groups are themselves facing pro-

vincial funding cuts and laying off advocates. The conse-

quence is that low-income people needing help with a

welfare, EI, pension or WCB complaint, or help challeng-

ing an unfair landlord or consumer fraud, no longer have

equal access to justice, and may be denied life-sustaining

benefits to which they are entitled. There is also a gender

dimension to these cuts—while legal aid is being main-

tained for criminal matters (which involve mostly men),

it is being eliminated for poverty law, which dispropor-

tionately affects women.91

The cuts to legal aid have met with some dramatic op-

position. The board of the Legal Services Society of BC

refused to implement a government directive to close 60

legal aid offices across the province and cut nearly 40 per

cent from the legal aid budget, and was consequently fired

by the Attorney General and replaced with a trustee. The

Attorney General, Geoff Plant, was, in turn, the subject

of a vote of non-confidence by the Law Society of BC.

Low-income people needing help with a welfare, EI, pension or

WCB complaint no longer have equal access to justice, and may

be denied life-sustaining benefits to which they are entitled.


Imagining a more progressive reform agenda requires

first that we appreciate what welfare is, and what it is not.

Welfare is a social program intended to mitigate market

failures—poverty and unemployment. It is needed be-

cause the market economy produces an inadequate sup-

ply of decent-paying jobs and affordable housing, and

because some people are unable to engage in paid work

and need a decent income.

Welfare also exists so that, when push comes to shove,

people feel able to quit or turn down jobs that either pay

inadequately or offer intolerable working conditions. All

of society has a stake in strong welfare rights. There is a

societal benefit when people feel able to quit bad jobs

and fall back upon a secure social safety net—whether it

be social assistance or employment insurance—as this

puts upward pressure on employers to improve working

conditions and raise wages. This is one of the ways in

which societies slowly progress.

Adequate welfare is not the cause of poverty or unem-

ployment (as some neo-liberal economists contend).

Rather, it is one policy tool for dealing with these social

ills. One should not judge or condemn

the welfare system by how many people

rely on it (as the Fraser Institute does)—

that is how one should judge the

economy.

A more progressive welfare reform agenda would have

the following elements:

• Welfare benefit rates would be increased, to ensure

a decent standard of living for all those in need. It

is cruel and unreasonable to expect people to cover

all non-shelter costs with only $6 per day. SPARC

BC has calculated the level of benefits required to

meet the minimum costs of living.92

• The rationale used by the provincial government

to set welfare rates would be clear and transparent.

It is imperative that the government reveal the re-

search and/or data on which it is basing decisions

concerning levels of support and shelter benefits in

BC. If the government refuses to document the evi-

dence it is using to support its welfare policy plat-

form, a public review committee should be estab-

lished to: (i) obligate the government to live up to

its stated goals of transparency and accountability

by disclosing the foundation for decisions on wel-

fare benefit rates; (ii) develop an adequate income

PART 4

A Progressive AlternativeWelfare Reform Agenda

ANOTHER WAY IS POSSIBLE. The hardship we are

anticipating—and already witnessing—as a result

of BC’s new welfare policies need not happen.


assistance rate structure; and (iii) involve low-in-

come people in the policy making and decision

process.

• Welfare benefits would be indexed to cost of living

increases, so that their real value does not erode over

time (as has occurred over the last 20 years).

• The separation between the support and shelter

components of welfare benefits would be elimi-

nated, creating a single overall benefit that allows

recipients to make their own spending decisions.

• Earnings exemptions, including flat rate earnings

exemptions, would be restored and increased from

previous levels. A better model would see a flat rate

exemption of $200 or higher, with additional earn-

ings clawed back at a rate of 25 per cent until a per-

son’s income is deemed sufficiently high (such as

above the poverty line).

• Earnings exemptions would be combined with

other forms of expanded employment support—

high-quality and accessible child care, transporta-

tion allowances or bus passes, training and educa-

tion, and a higher minimum wage. If these are in

place, there is little reason to believe re-instating

earnings exemptions and raising benefit rates would

lead to increased welfare caseloads.

• The availability of high quality, regulated, and af-

fordable child care spaces would be significantly

increased, ideally through a provincial government

commitment to universal programming. This

would ensure that single parents are better able to

find and keep paid employment—an essential pre-

condition to decreasing the number of families liv-

ing in poverty. There is also strong evidence that

the most effective social program we can undertake

to prevent poverty, increase employment, minimize

gender inequality, and contribute to the develop-

ment of a knowledge-based workforce in the future

is to invest in quality early childhood education to-

day.93

• If employment support programs are needed, they

should be individualized and nurturing, offering

people one-on-one assistance that addresses their

personal barriers to employment. The welfare sys-

tem would no longer be punitive and humiliating,

but a springboard to help improve people’s lives and,

by extension, the economic and social well-being of

the province.

• Meaningful, long-term training and education

would be offered and supported, so that low-income

people could access stable, well-paying jobs. This

would require increasing post-secondary spaces, and

expanding apprenticeship training. This approach

costs more in the short-term and takes longer than

the “fastest route to a job” approach now in opera-

tion, but represents the difference between being

stuck in the low-wage economy and finding decent-

paying work that is stable and self-sustaining. It also

trains people for the higher-skill jobs we know will

be needed in the modern, knowledge-based

economy of the future. Evidence also indicates that

mothers with higher education levels have children

who are less likely to end up in poverty and in need

of welfare.94 A long-term approach is needed.

• The availability of social and other low-cost hous-

ing would be dramatically increased. Without ques-

tion, safe and secure housing is the central ingredi-

ent to maintaining good health and finding stable

employment.

• BC would adopt an Anti-Poverty Law (similar to

the one adopted by all parties of Quebec’s National

Assembly in December 2002). Such a law would set

out clear targets and deadlines for the reduction and

All of society has a stake in strong welfare rights.

There is a societal benefit when people feel able to quit

bad jobs and fall back upon a secure social safety net—

whether it be social assistance or employment insurance

—as this puts upward pressure on employers

to improve working conditions and raise wages.


elimination of poverty (just as governments do with

respect to balancing the budget and other fiscal tar-

gets). It would see the government develop an anti-

poverty action plan, and all government policies

would have to be assessed based on their impact on

lower-income people.95

• Last, but not least, a truly progressive approach

would emphasize the need for more decent-paying

jobs, and would seek to build a full employment

economy. Rather than coercing people into bad jobs,

a progressive approach would appreciate that no

coercion is needed to draw people to meaningful

training and decent-paying jobs—people flock to

such opportunities. A full employment strategy

would include boosting public spending on both

capital projects (such as public transit, social hous-

ing, building retrofits and other environmental in-

frastructure) and public services (such as child care

and home care), developing public investment

funds, requiring banks to adhere to a Community

Reinvestment Act, and shorter work-weeks and

enhanced work-time sharing.96

Ultimately, the goal must be improving people’s lives,

well-being and future prospects, not merely reducing

welfare rolls. Too often, the public views the persistence

of poverty as inevitable. But international comparisons,

such as the Luxembourg Income Study, tell us that a

number of countries, such as those in Scandinavia, have

much lower poverty rates than exist in Canada or the

US, without compromising economic performance. The

key point being that countries that are serious about re-

ducing poverty can and do—and consequently record

better health, well-being, and child development out-

comes.

Too often, the public views the persistence of poverty

as inevitable. But international comparisons tell us that

other countries have much lower poverty rates than exist

in Canada or the US, without compromising economic

performance. The key point is that countries that are

serious about reducing poverty can and do.


The welfare system is also an expression of social soli-

darity—it is one of the ways the members of our society

have chosen to look after one another when facing hard-

ships such as poverty, disability, unemployment, or abuse.

In short, welfare is part of how we discharge our moral

obligations to one another.

From an economic perspective, welfare (like EI) should

also serve as an “automatic stabilizer.” Welfare is designed

to moderate the peaks and valleys that characterize the

business cycle: when times are good and jobs are plenti-

ful, welfare rolls and costs decrease automatically. But

when the economy slows and unemployment increases,

the welfare and EI systems should kick-in automatically,

concentrating income in the pockets of those hardest hit

and in the communities hardest hit. These systems are

elegant in their simplicity. When facing an economic

downturn, no new bureaucratic programs are needed, no

federal-provincial negotiations are required—these sys-

tems kick-in automatically to mitigate the harmful ef-

fects of economic slowdown and job loss.

There is a great risk, however, that BC’s new

welfare policies—and the two-year time limit

and two-year independence test in particular—

will serve to undermine this automatic stabilizer

function by denying people the right to welfare

when in need. The fact that the 2002 and 2003

provincial budgets forecast declining welfare

caseloads over the coming years even while the unem-

ployment rate remains higher than it was in 2000 high-

lights this risk. In effect, BC is eroding the ability of the

welfare system to mitigate economic slowdown and job

loss.

If BC is fortunate and an improved global economy

results in increased economic growth and job creation

in the coming years, we will indeed witness a decline in

welfare caseloads (as has been the case since 1995), and

the government will be eager to claim credit for its wel-

fare reforms. However, if the government’s program is

successful in pushing many people off welfare but into a

weak labour market—characterized by increased com-

petition for low-wage work—the outcome will be in-

creased hardship for both those leaving social assistance

and those already toiling in the low-wage workforce. In-

tensified competition for low-wage jobs will depress

wages and earnings, ironically exacting a price for the

very people welfare reformers purport to honour—the

“working poor.”97

PART 5

Conclusion

WELFARE IS A CRITICAL element of our social

safety net. It is an important basic right in

which almost all of society has a stake—

even if one is never forced to rely on social

assistance.


This paper sounds a warning:

• The BC government, which has modelled some of

its new welfare policies on the US restructuring of

the 1990s, hopes to see its welfare rolls decline. But

evidence from the US experience reviewed in this

paper indicates that the dramatic caseload declines

that marked the 1990s were primarily a product of

unprecedented economic growth, a condition that

no longer exists. Moreover, when measures are

made consistent, US welfare caseloads are not sig-

nificantly lower than those in Canada. We also find

that low-income people in the US continue to ex-

perience great—and in some cases increased—

hardship, and many have not found employment

despite the favourable economic conditions that

marked the 1990s. The new US policy with the most

potential to reduce caseloads (and increase hard-

ship) is time limits, but the first cohort of US fami-

lies is only now starting to hit its lifetime limits, so

only early data is available.

• While the BC government has borrowed many

policy ideas from the US, it has chosen to import

only the policy “sticks” that push and keep people

off welfare—such as time limits, tough sanctions,

workfare, and “diversion” strategies that deny peo-

ple benefits when in need. But none of the policy

“carrots” or supports that help people make the

transition to paid employment—such as enhanced

child care, transportation support, increasing the

minimum wage, enhanced training and educational

opportunities, and the expanded use of earnings

exemptions—have been adopted.

• BC’s new approach to social assistance will indeed

mean that some people’s stay on welfare is more

brief, and that others are denied welfare entirely.

But troubling questions remain: What happens to

those who need more help, face more barriers to

employment, or run up against the new time limits

before the local economy produces adequate em-

ployment? What happens to those simply denied

support under the new rules? What happens to

those who need meaningful training opportunities,

but find themselves in a new welfare system with a

greatly reduced capacity to provide such training

and education?

Over the coming years, it will be vital to monitor the

impact of BC’s new welfare rules. More research will be

needed to track the potential harmful effects outlined in

this paper. In particular, given the nature of the policy

changes, careful monitoring of measures of critical hard-

ship and poverty—homelessness, evictions, going with-

out food, and health impacts—will be essential. Already,

an official with the City of Vancouver’s Tenant Assistance

Program has stated that, after seeing declines in recent

years, homelessness in the city has been on the rise since

the April 2002 implementation of BC’s new welfare

rules,98 but more comprehensive study is required. If pre-

sented with such evidence, the government must be pre-

pared to rethink its welfare policies.

But even now, we have shown how and why many of

BC’s new welfare policies result in increased hardship,

and in some cases we find that the new policies are con-

tradictory to the government’s stated goals. The cuts to

rates and benefits reduce what was already an inadequate

level of income support, and new rules tightening (and

denying) eligibility represent a fundamental change in

Canadian social policy—a denial of the right to income

support when in need.

In short, BC’s new welfare rules are harmful, mean-

spirited and unjustified, and they should be thoughtfully

and compassionately reconsidered. As we outlined in the

final section of this paper, a more hopeful and progres-

sive alternative is possible. All that is needed is the politi-

cal will to implement it.

When the economy slows and unemployment increases,

welfare and EI systems should kick-in automatically,

concentrating assistance on people and communities hardest

hit. There is a great risk that these new policies will undermine

this function by denying the right to welfare when in need.


welfare reform. Under then Governor Tommy Thompson,

Wisconsin implemented a new welfare system called Wis-

consin Works (commonly known by its acronym W-2).

Wisconsin was among the first states to experiment with

such practices as time limits, workfare, privatization, and

tough sanctions—and it witnessed one of the most dra-

matic declines in official welfare caseloads over the 1990s.

Indeed, Wisconsin was the model for many of the com-

ponents of the federal PRWORA in 1996.

In the face of Wisconsin’s caseload declines, a key ques-

tion for policy-makers looking for inspiration south of

the border is whether people leaving welfare are becom-

ing more “self-sufficient” and reducing their need for

public support by entering the paid workforce. By the

end of the 1990s (a period of record economic growth),

were the circumstances of low-in-

come people substantially improved?

Unfortunately, a closer examination

of the situation in Wisconsin clearly

shows a less rosy situation for low-in-

come people than the boosters of the

Wisconsin model would have us be-

lieve.

Who Gets Counted: The Myth ofWisconsin’s Welfare Caseload Decline

The story of Wisconsin’s welfare reform “miracle” has

been woven from statistics documenting a dramatic de-

cline in the caseload—an incredible drop of 89 per cent

over the last decade. Unfortunately for those keen to cel-

ebrate Wisconsin’s success, some important threads have

been missed in the weaving of this story. As a result, what

has been produced is actually a blanket full of holes.

The apparent large decline in welfare caseloads in Wis-

consin results in part through the mis-measurement of

who is actually “on welfare.” By narrowly defining who

counts as a recipient of assistance to exclude those ben-

efiting from various new and long-standing state

APPENDIX

A Closer Look at the“Wisconsin Miracle”

The Human Side ofWelfare Restructuring

NEO-LIBERALS IN CANADA have been keen to import

US-style welfare policies, pointing to the alleged

“miracle” of significantly reduced welfare caseloads.

In particular, welfare “reformers” in both Ontario

and BC have drawn inspiration from the example

of Wisconsin—the poster child for neo-liberal


support programs, the data appear to indicate a signifi-

cant drop in the overall caseload. When the definition of

assistance is broadened to include these other programs,

however, a different picture emerges—one showing a

much smaller overall decrease in the number of people

receiving public support.

The oft-quoted 89 per cent drop in Wisconsin’s wel-

fare caseload is actually a decline in the number of peo-

ple receiving cash assistance, and this drop has indeed

been dramatic. But while cash assistance may be the pro-

gram most frequently associated with welfare, delivering

monetary support is only one part of the public support

system in the US. In fact, cash assistance is an increas-

ingly small segment of the overall welfare system, having

declined in significance during the implementation of

Wisconsin’s W-2 welfare regime.

The number of people receiving cash assistance in

Wisconsin as a percentage of the overall composition of

the welfare caseload shrunk from over two-thirds in 1996

to just 16 per cent in 2000. At the same time, the number

of people receiving other forms of support—notably child

care assistance and job search and training programs—

substantially increased. Some people have been shifted

from cash assistance to other new or expanded programs,

with notable examples in Wisconsin including a new

child-only program (Kinship Care), and a new type of

non-cash assistance (case management), both of which

have been areas of considerable growth.99

By not including people receiving support through

programs other than cash assistance, the welfare caseload

decline in Wisconsin has been overstated. In 1995, the

number of people receiving cash assistance plus the

number receiving assistance to care for a related or disa-

bled child, case management services, Food Stamps, Med-

icaid, and/or child care assistance, was approximately

118,595. Five years later, in 2000, the number of people

receiving at least one of these low-income services was

114,725. This constitutes a drop of only 3 per cent in the

overall public assistance caseload.100

In the absence of a significant decline in the total

number of people receiving assistance through the wel-

fare system, it is unsurprising that there is also little evi-

dence of overall decreases in the cost of providing these

services. As suggested above, what there has been is a shift

in the amount of money dedicated to different programs.

According to data from a group of Midwestern states (in-

cluding Wisconsin), the majority of dollars are no longer

spent on cash assistance: child care is now the largest area

of expenditure.101 Overall, total spending on low-income

programs in the Midwestern states actually increased

slightly between 1996 and 2000, from $4.7 billion to $4.8

billion.102

Are People Getting Decent JobsWhen They Leave Welfare?

Even the Wisconsin Legislative Audit Bureau acknowl-

edged that increased self-sufficiency among former W-2

participants has not been assured as a result of welfare

program changes.103 The strong economy of the 1990s,

in combination with federal government decisions to raise

the minimum wage and increase spending on the Earned

Income Tax Credit for low-income workers, did help

head-off the surges in poverty and hardship predicted by

some commentators in the wake of welfare restructur-

ing. However, these circumstances have not been enough

to eliminate persistently high levels of economic hard-

ship among those who left cash assistance.

While many former cash assistance recipients do find

employment, cash support is typically replaced with low-

wage, often part-time or temporary employment—jobs

that keep individuals and families living in poverty and

swell the ranks of the working poor. Unsurprisingly, many

former recipients therefore continue to depend on Food

Stamps, Medicaid, and other forms of government or

community-based assistance. For many of those who rely

on public support, the prospects for improved earnings

and stable employment are limited by typically low skill

and education levels.104 Wisconsin’s “fastest route to a

job” approach to welfare reform—as opposed to longer-

term investments in education and training—has done

nothing to ameliorate these limitations, while stiff com-

petition in the low-wage labour market presents a fur-

ther barrier to accessing even marginal employment.

A key reason why those who have left welfare tend to

remain poor relates to the areas of the job market in which

they are able to find employment. By and large, leavers

are concentrated in low-paying sectors and occupations

with few (if any) workplace benefits—primarily the serv-

ice and retail sectors. In general, service occupations pro-

vide the lowest median weekly earnings of all jobs. While

the earnings of welfare leavers do tend to grow over time,

this growth is slow, unsteady and, for many, precarious.105

In addition to clustering in low-wage sectors of the

job market, welfare leavers also tend to secure only part-

time or part-year work, and experience frequent job

loss.106 A 2001 report by the Center for Law and Social


Policy that looked at studies of welfare leavers from 26

states (including Wisconsin) found that only about half

of leavers had earnings in all four quarters of the year.

Even among those few former cash assistance recipients

who do record some earnings in each quarter, in almost

no cases do they have an income that reaches the poverty

guidelines for a family of three in their first year after

finding employment.107

While the booming US economy of the 1990s did help

many welfare leavers (particularly women) find jobs,

many of these positions disappeared during the recent

downturn and post-September 11th. The sectors in which

employment was typically found are those that have been

hit hardest—hotel and lodging industries, and the serv-

ice sector. Given their shorter work histories, former wel-

fare recipients are frequently among the first laid off—

now with a weakened social safety net to fall back on.108

Overall, while welfare reforms in Wisconsin may have

been successful in reducing cash assistance caseloads, in-

creasing workforce participation, and providing employ-

ers with subsidized cheap labour, their success in ensur-

ing the economic self-sufficiency of former participants

has not yet been established. Those who have left cash

assistance are likely to remain poor and, as a result, con-

tinue to rely on assistance from Food Stamps, Medicaid,

and child care supports. According to the Wisconsin Leg-

islative Audit Bureau, these avenues of support may in

fact be essential to the ability of former recipients of cash

assistance to maintain employment.109

Persistent Poverty and ContinuedDemand for Emergency Servicesand Community Support

Although the number of families receiving cash assist-

ance has declined in Wisconsin, this measure does not

provide an accurate gauge of need and hardship in the

community. In addition to ongoing reliance on state-sup-

port programs discussed above, thousands of families

continue to turn to a private, voluntary safety net to make

ends meet. In many cases, community organizations,

families, friends, and neighbours have become the de-

fault providers of emergency services.115

Sadly, financial hardship plagues both families receiv-

ing cash assistance and those with a member working on

a part-time or temporary basis. Studies have shown that

some poor families with paid employment do not have

access to government support programs, while many oth-

ers are either denied access to, or are unaware of (and are

not told about) their eligibility for, various types of as-

sistance.116

According to some commentators, hardship among the

poor may have actually increased over the 1990s, instead

of declining, as would be expected during a period of

strong economic growth.117 Data from Milwaukee

County (where the bulk of Wisconsin’s low-income popu-

lation and welfare recipients are concentrated) indicates

that hardship has increased under the new welfare

From “Welfare Poor” to “Working Poor”

• The Wisconsin Legislative Audit Bureau reports that, based on average income reported by former W-2

recipients who filed 1999 tax returns, 66 per cent remain below the poverty level for their respective

family size before the addition of state and federal EITC dollars.110 When the money delivered through the

EITC is counted, 53 per cent of filers remain below the poverty line.111 The report goes on to note that

since the numbers used in these calculations do not take into consideration that one-third of the sample

of W-2 leavers did not file tax returns, it is likely that the percentage of former W-2 participants above the

poverty level is actually overstated. If this is not disturbing enough, a recent report from the Economic

Policy Institute observes that researchers generally agree that the US poverty line income is not sufficient

to support most working families.112

• A 1999 study of employment in Milwaukee, Wisconsin, reports that only one in five full-time job openings

that required no education or experience paid enough to support a family of four above the poverty level.

Less than half of these positions paid enough to secure an income above the poverty level for a three-

person family.113

• According to the same study, unemployed job seekers and parents receiving W-2 support outnumbered

full-time job openings by 7 to 1 in central city Milwaukee neighbourhoods.114


system. This is reflected in the increased usage of emer-

gency services for food, housing, and health care:

• While Food Stamp usage declined, the number of

food-related calls to the Milwaukee County Com-

munity Information Line increased by 136 per cent

between 1996 and 2000, and the amount of food

distributed by two Milwaukee organizations in-

creased 58 per cent between 1995 and 2000.118

• There has been an overall upward trend in evictions

since 1995 in Milwaukee County, with 12,108 ten-

ants being evicted in 2000. The annual call volume

for the Shelter Referral Coordination Program in-

creased 88 per cent from 1998 to 2000, while the

number of emergency shelter referrals increased 553

per cent over the same period. The number of peo-

ple in “vulnerable” housing situations increased by

450 per cent between 1999 and 2000.119

• Enrolment in Medicaid (US public health insurance

for very low-income people) was denied to many

eligible families when W-2 was implemented de-

spite the low incidence of coverage by employer-

sponsored health insurance programs among wel-

fare leavers.120 Hospital emergency services typi-

cally become the default option for medical care

for those without health coverage: emergency room

usage increased by 26 per cent in the Milwaukee

area between 1995 and 1998. In addition, the

amount of uncompensated care (medical care not

paid for by the recipient or the recipient’s family)

has grown by 89 per cent in Milwaukee County

since 1995. Between 1995 and 1999, there was a 104

per cent increase in the number of charity care pa-

tients, and an 82 per cent increase in defaulted

medical bills.121

What is most disturbing about the above data is that

the period it covers was a time of significant economic

expansion in the US. In other words, it was despite a

booming economy that community organizations were

faced with more requests for emergency assistance. As

data becomes available for the years spanning the recent

recession, it is likely that the situation for low-income

families will be shown to have worsened.

In addition to failing to generate substantial declines

in the number of families living in poverty, some com-

mentators argue that the welfare reform process has ac-

tually contributed to a deepening of poverty among the

already disadvantaged. As the Institute for Wisconsin’s

Future notes, “In 1989, only 10 per cent of Wisconsin’s

food stamp families with children were living at a level of

extreme poverty, with incomes less than 50 per cent of

the poverty level ($6,665 for a family of three in 1997).

By 1997, 32 per cent of Wisconsin’s food stamp house-

holds with children were at this extreme level of pov-

erty.”122 This acute poverty is concentrated in the

Milwaukee area, where unemployment and poverty have

remained high through the 1990s despite economic

growth. Poverty rates in Milwaukee are consistently higher

than in the rest of Wisconsin, and are especially dire for

children under age 18.123

Summing up theWisconsin Experience

Overall, it is true that the cash assistance welfare caseload

has declined significantly in Wisconsin. However, draw-

ing the conclusion that welfare reform policies have there-

fore been “successful” is misguided. First, record economic

growth played an important role in moving many fami-

lies from welfare to paid employment. Second, cash as-

sistance represents a declining portion of the overall wel-

fare system, as an increased share of families now rely on

other support programs not included in caseload statis-

tics. Despite evidence that many eligible people are being

denied access to Food Stamps, Medicaid, child care as-

sistance, and other low-income programs, the need for

these supports has not declined, as former recipients of

cash assistance typically take up low-paying and precari-

ous employment. These kinds of programs, as well as the

emergency and community-based supports available

from private sources, remain key resources for the work-

ing and non-working poor. In light of this evidence, it is

clear that when evaluating the alleged “success” of wel-

fare reform policies, caseload trends represent only one

small piece of a much larger story.

In 1989, only 10 per cent of Wisconsin’s food stamp

families with children lived at a level of extreme poverty.

By 1997, 32 per cent were at this level.


Notes1 BC Ministry of Human Resources.

2 In the 2003 BC Budget, these cuts were made even

deeper—the total cut to MHR will now amount to

$609 million.

3 Smith, 2001, p. 18.

4 For excellent policy analyses of Ontario’s welfare

reforms, see the work of Welfare Watch:

www.welfarewatch.toronto.on.ca

5 BC Ministry of Human Resources, 2002. MHR Exit

Survey–Spring 2002; MHR Exit Survey—Summer

2002; and MHR Exit Survey—Fall 2002.

6 Frenette and Picot, 2003.

7 Ministry of Human Resource, April 15, 2002, news

release.

8 For more on the distribution of BC’s tax cuts, see Lee,

2002; and Fuller and Stephens, 2002.

9 Schafer et al., 2001.

10 The fact that people without children cannot claim

welfare in the US also helps to explain why so much

of the US literature and public debate on welfare

reform is, to the Canadian observer, bizarrely

obsessed with “out-of-wedlock single mothers on

welfare.” Indeed, the US welfare reform package

included numerous measures to encourage marriage

and out-of-wedlock abstinence. Yet, it is almost

never suggested in the US literature that welfare be

extended to people without children.

11 Danziger, 2000.

12 Princeton University sociologist Bruce Western and

Indiana University sociologist Katherine Beckett, in

a groundbreaking study looking at the role of the US

penal system in the labour market, argue that “In the

United States, criminal justice policy provides a

significant state intervention with profound effects

on employment trends… By 1996, 1.63 million

people were being detained in American prisons and

jails—a threefold increase from 1980…

Incarceration generated a sizeable, nonmarket

reallocation of labor, overshadowing state

intervention through social policy.” (Western and

Beckett, 1999, p. 1031.) They note that by 1995,

nearly 7 per cent of black male adults were

incarcerated. The authors calculate that, “If included

in labor market statistics, the population of

incarcerated men would contribute about two

percentage points to the U.S. male unemployment

rate by the mid-1990s.” (Ibid, p. 1052.)

13 Western and Guetzkow, 2002. Also see Randall Wray,

2001; Wray notes that by 2000, the US incarceration

rate exceeded 2 million people, a growth he refers to

as “penal Keynesianism.”

14 Canadian Labour Congress, 1999.

15 One Fraser Institute recommendation that the BC

government has not pursued (for now, at least) is for

government to enter into contracts with “faith-based

organizations” to deliver social assistance programs.

16 Bernstein and Greenberg, 2001.

17 Meckler, 2003.

18 US General Accounting Office, 2001

19 The US minimum wage was increased from $4.25 to

$5.15 in 1997, just after welfare reform was

implemented. A major expansion of the Earned

Income Tax Credit (EITC) was passed in 1993. The

EITC goes to families with incomes under US$32,000

(if they have two or more children), under

US$28,000 (if a family has only one child), and

under US$10,000 (for workers without children).

Families have their credits gradually scaled back after

their earned income exceeds about $12,000. The

EITC went to over 18 million US families in 2000,

and lifted almost five million of them out of poverty

(see Maxwell, 2002, p. 8). In practice, this means that,

as of 1998, a working single mother is eligible for a

maximum EITC payment of $2,272 with one child,

and $3,576 with two or more children. In addition to

changes in the minimum wage and the EITC, the

Child Health Insurance Program (CHIP) was passed

in 1997. This program subsidizes health care for

children of the working poor, making jobs that do

not provide health care coverage more attractive (see

Danziger, 2000).

20 Bashevkin, 2002b; and Maxwell, 2002.

21 Danziger, 2000.


22 Phone interview with Jamie Peck, Professor of

Geography, University of Wisconsin–Madison.

23 Bernstein et al., 2002.


25 Black et al., 2000.

26 Fortin and Crémieux, 1998.

27 Black et al., 2000.

28 Bernstein et al., 2002.

29 Schafer et al., 2001, p. 33; also see Bernstein and

Greenberg, 2001.

30 See Kilborn, 2001. For example, in Washington State

in 2001, Governor Gary Locke ordered permanent

exemptions for all but 120 of the 3,200 families who

were approaching their five-year limits in 2002.

Some states, such as Virginia have exempted welfare

recipients in communities with an unemployment

rate in excess of 10 per cent. (Also see Bloom et al.,

2002.)

31 Bloom et al., 2002.

32 Ehrenreich and Piven, 2002.

33 Pearlstein, 2002. Note that the US poverty line and

Canada’s low-income cut-off use different

methodologies and are not comparable. While the

US poverty rate may appear lower than Canada’s,

when a consistent international measure is used, the

US poverty rate is higher.

34 Ehrenreich and Fox Piven, 2002.

35 Meckler, 2002 (based on data collected by the Center

for Law and Social Policy).

36 Bernstein et al., 2002; also see Bernstein and Lazere,

2001.

37 Boushey, 2002.

38 Ibid. Also see Loprest, 2001, for more detailed

hardship findings from the National Survey of

America’s Families.


40 Boushey and Gundersen, 2001.

41 Pearlstein, 2002.

42 US poverty lines are not equivalent to Statistics

Canada’s Low-Income Cut-Off (commonly used as

Canada’s poverty line). When consistent

international measures are used, Canada’s poverty

rate is less than that of the US.

43 Danziger, 2000, p. 6.

44 This rule will not apply to welfare recipients with a

disability or multiple barriers to employment.

45 Long and Goldberg, 2002.

46 Goldberg and Long, 2001. This calculation is based

on the estimated minimum living costs of a single

parent with a five-year-old child.

47 The support allowance for single parent families was

actually cut by $51 per month. However, there was a

slight increase in the BC Family Bonus, making the

overall cut $43 per month.

48 Dieticians of Canada and Community Nutritionists

Council of BC, 2002. Of note, the MHR has also

made it more difficult for people with disabilities to

qualify for funding for a high protein diet ($40 per

month). This special allowance is now restricted to

people with certain medical conditions, whereas

previously a doctor’s confirmation that a high

protein diet was needed was sufficient.


50 Canada Mortgage and Housing Corporation,

October 2002.

51 Figures released by Ministry of Human Resources to

David Schreck, as a result of a Freedom of

Information Request. Posted by David Schreck on

StrategicThoughts.com on March 12, 2003.

52 For more on this dynamic, see Klein and

Montgomery, 2001.

53 For example, a single person on social assistance who

earned $200 in a month would be able to keep $125

(the $100 flat rate exemption, plus 25 per cent of the

additional income).

54 The BC MHR contends that earnings exemptions, by

allowing people to mix income assistance and

employment, lead people to stay on welfare longer.

This view is supported by only one source—the US

Manpower Demonstration Research Corporation

(Berlin, 2000)—and even this source recognizes that

the reason for the alleged longer stays is that

earnings exemptions increase the incomes of those

on social assistance and reduce poverty. There is

other compelling research evidence that earnings

exemptions help in the transition to work. A report

published in 1998 by the US-based National Center

for Children in Poverty concludes: “While earlier


research raised concerns that financial incentives

could reduce recipients’ work effort, more recent

findings indicate that incentives are helping some

families improve their income, obtain jobs, and

escape poverty without increasing welfare receipt”

(Ellen Berrey, 1998). A 1999 study by Blank, Card

and Robins reports that “programs with enhanced

earnings disregards also suggest that these programs

increase employment” (Rebecca Blank, David Card,

and Philip K. Robins, 1999).

55 In addition, the earnings exemption systems of New

Brunswick, Quebec, Ontario and Alberta are all

more generous than what existed in BC before the

recent cut. (See National Council of Welfare, 2002.)

56 Moore, 2002, based on Statistics from the Ministry of

Human Resources.


58 Coalition of Child Care Advocates of BC, April 2003.

59 Forer and Hunter, 2001.

60 Coalition of Child Care Advocates of BC, April 2003.

61 Goelman et al., 2000.

62 The only categories of people not required to wait

three weeks are: clients in residential care facilities or

hospital; those with serious mental or physical

health impairments; children in the home of a

relative; and spouses currently on welfare that have

recently separated and are now applying for welfare

independently.

63 The Client Employability Profile assesses such factors

as work experience, employment search skills,

education and training, literacy, transportation

needs, child care needs, criminal record, shelter

situation, health and disability issues, and

communication skills.

64 Warburton, 1999. These statistics include all cases,

including people with disabilities and families with

young children. Statistics for those deemed

“employable” would show an even shorter average

stay on social assistance.

65 Moore, 2002.

66 The two-year time limit does not apply to the

following groups: people with a disability, single

parents with a disabled child or a child under age

three, children in the home of a relative, refugee

claimants not yet granted landed status, and people

who are temporarily excused from seeking work.

67 US time limits apply to families with children.

Employable people without children do not qualify

for cash assistance in most US states.

68 Bania et al., 2001, p. 2.

69 Ibid, pp. 3-5.

70 Bloom et al., 2002.

71 Ibid.

72 For more on the individual benefits and social returns

of education, see Allen 1999.

73 Schafer et al., 2001, p. 34.

74 US General Accounting Office, 1999, p. 22.

75 Rothstein, 2002. Rothstein notes that some states and

community colleges have stretched the federal

welfare rules. They have turned to state support and

local scholarships for the extra time needed to

complete a degree. At City College of San Francisco,

for example, college counsellors help people on

welfare organize their financial aid and course

selections—even child care and transportation

needs—so that students on welfare can secure stable

employment in fields such as nursing and business

administration.

76 HRDC, 2001, p. 17.

77 Ibid, pp. 22-23.

78 Polk, 2002.

79 Carrigg, 2003b.

80 Tieleman, 2002.

81 The Ministry stated that recipients of DBII are not

required to complete the reassessment if “the

Ministry’s internal review determines there is

sufficient information on a client’s file to confirm

their eligibility under the new criteria” (Ministry of

Human Resources, Sept. 30, 2002).

82 Tieleman, 2002.

83 Dolan, 2003.

84 Campbell and Lacey, 2002.

85 Reitsma-Street, 2002.


86 Defenders like to claim that Accenture’s system has

saved the Ontario government $692 million. But this

figure represents the total savings due to declining

welfare rolls. As Ontario’s Auditor-General notes,

“[Accenture’s] system does not provide the

information necessary to assess why the welfare rolls

declined. The much more likely causes for that

decline are the improved economy in Ontario and

the policy decision to tighten eligibility

rules”(Peters, 2003).

87 For more on Accenture’s social assistance reform in

Ontario, see Ernie Lightman, 2003, pp. 108-09.

88 Peters, 2003.

89 Ibid.

90 Mitchell and Morrison.

91 National Council of Welfare, 1995, p. 10.

92 See Long and Goldberg, 2002.

93 Hertzman, 2000.

94 US General Accounting Office, 1999, p. 3.

95 For more on Quebec’s new law, see Alain Noel, 2002.

96 For more on these ideas, see the CCPA’s annual

Alternative Federal Budgets.

97 For a detailed analysis of this phenomenon, see Klein

and Montgomery, 2001.

98 Carrigg, 2002, and 2003a.

99 Case management is a new type of what is called

“supportive services” in Wisconsin. These services

are available to people ineligible for cash assistance

because they have no dependent children, or because

they are already working full-time or are capable of

working full-time. The types of services offered in

the case management category include access to a

case manager, assistance with job searches and

education or training programs, and money

management or parenting classes.

100 Swartz, 2001.

101 Spending also increased significantly in other areas,

including initiatives to move recipients into the

workforce, and an area that states call “family

formation and stability” that includes things like

home visits to low income families with newborns,

efforts to “reattach” fathers to their children, and

efforts to reduce teen pregnancy.

102 Corbett, 2001, pp. 3-4.

103 Wisconsin Joint Legislative Audit Committee, 2001.

104 Danziger, 2000, p. 2.

105 Richer, Savner and Greenberg, 2001, p. 8; and Patel.

106 Richer, Savner and Greenberg, 2001, p. 8; Danziger,

2000; and Patel.

107 Richer, Savner and Greenberg, 2001.

108 Boushey, 2001.

109 Wisconsin Joint Legislative Audit Committee, 2001.

110 The average benefit from state EITC is $415.

Combined state and federal benefits averaged

$2,320. EITC payments to Milwaukee County

families increased from $49.5 million in 1993 to

$127.8 million in 1997. About 90 per cent of eligible

families appear to be claiming the EITC in

Milwaukee (State of Milwaukee’s Children, 1999).

111 Wisconsin Legislative Audit Bureau, 2001, p. 44.

112 Boushey et al., 2001.

113 State of Milwaukee’s Children, 1999, p. 5.

114 State of Milwaukee’s Children, 1999, p. 5; see also

Institute for Wisconsin’s Future, 1998, p. 5.

115 Fendt, Mulligan-Hansel and White, 2001.

116 Fendt, Mulligan-Hansel and White, 2001; Institute

for Wisconsin’s Future, 1998; Mulligan-Hansel and

Norman, 2001; State of Milwaukee’s Children, 1999.

117 Boushey and Gundersen, p. 13; and Loprest, 2001.

118 Fendt, Mulligan-Hansel and White, 2001. Receipt of

Food Stamps in Milwaukee County has declined by

30 per cent since 1995. This decline is attributed to

the fact that some families were diverted from

applying for Food Stamps, or were not told of their

eligibility for this program. Caseload declines have

also been given a boost by the strict policing of

eligibility: W2 participants moving from welfare

into work are required to re-establish their Food

Stamp eligibility every three months.


120 Fendt, Mulligan-Hansel and White, 2001, p. 18-19;

see also Richer, Savner and Greenberg, 2001.


122 Moore and Selkowe, 1999, p. 3.

123 Fendt, Mulligan-Hansel and White, 2001, p. 26-7.


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